Shares of First Republic Bank fell nearly 70% in pre-market trading Monday — just hours after federal regulators announced they would step in and take control of failed lenders Silicon Valley Bank and Signature Bank.
San Francisco-based First Republic, a regional lender with more than $216 billion in assets under management, led the banking sector’s decline on Monday — sparking more fears that large financial institutions are at risk.
Backwest Bancorp’s stock price is down nearly 40% in premarket trading Monday while Western Alliance Bancorp shares are down about 20%.
Charles Schwab’s share price fell about 12% before Monday’s opening bell while Bank of America shares fell about 4%.
First Republic’s share price has taken a beating recently – down 29% in the last two trading sessions on Wall Street.
Stephen Ratner, the Wall Street financier who advised then-President Barack Obama during the 2009 bailout for the auto industry, wondered if a drop in the stock price would cause banks to run wild.
“First Republic and Backwest Bancorp stocks are set to open their way lower today,” Ratner tweeted Monday morning.
“What will depositors do?”
On Sunday, the Biden administration sought to avert a potential banking crisis after the historic failure of a Silicon Valley bank, assuring all depositors of the failed institution that they could quickly access all their funds, even as another big bank, Signature, closed.
The announcement came amid concerns about the spread of the factors that caused the failure of the Santa Clara, California bank.
Regulators worked all weekend to try to find a buyer for the bank, which was the second largest bank failure in history. Those efforts appeared to have failed on Sunday.
A near financial crisis that US regulators had to step in to prevent left Asian markets jittery as trading started on Monday.
Japan’s Nikkei 225 fell 1.6% in morning trade, Australia’s S&P/ASX 200 lost 0.3% and South Korea’s Kospi fell 0.4%.
But Hong Kong’s Hang Seng rose 1.4% and the Shanghai Composite rose 0.3%.
Manhattan-based Signature Bank — a major financial institution for the cryptocurrency industry — has been closed due to a “similar systemic risk exception,” according to a joint statement from the heads of the US Treasury, Federal Reserve and Federal Deposit Insurance Corporation.
Silicon depositors and depositors will become full, officials said, but bank shareholders and unsecured debtors will not be protected.
Follow The Washington Post’s coverage of the Silicon Valley bank meltdown
California-based Silicon Valley had $209 billion in assets when it failed on Friday, while Signature Bank had more than $110 billion.
Silicon was the second largest bank to fail in US history, after Washington Mutual in 2008. Signature was the third largest bank.
The Federal Reserve said it would create a new bank financing program to provide depository institutions with loans of up to one year, backed by US Treasury securities and other assets, to help banks.
said the feds The steps they are taking “will ensure that the US banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a way that promotes strong and sustainable economic growth.”
with mail wires
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