First Republic shares slide 8% even after Wall Street's white knights promise a $30 billion rescue
fell 8% in premarket trading early Friday despite a $30 billion lifeline from 11 of America's biggest banks.deposit a collective $30 billionThe San Francisco-based lender's stock rose to close 10% higher Thursday after the news. Fears eased that it would suffer a bank run, where customers rush to pull their deposits, given the fresh injection of cash.
But shares of First Republic swung lower in Friday premarket trading, sliding 7.7% to $31.64. Earlier, in the extended session Thursday, they dropped as much as 17%.and it would concentrate on cutting down on borrowings. First Republic also said its cash position was around $34 billion, excluding the Wall Street $30 billion. It noted it borrowed up $109 billion from the Federal Reserve between last Friday and Wednesday this week, when the banking sector and markets were rattled by the failure of Silicon Valley Bank.At the end of last year, they both booked a high share of uninsured deposits — 94% for SVB, and 68% for First Republic.
At the same time, they have worryingly high unrealized losses. SVB is sitting on about $16 billion and First Republic has $4.8 billion on its held-to-maturity bond book.. In addition, it said in a regulatory filing it had received $70 billion of liquidity from the Fed and JPMorgan Chase. First Republic shares have dropped 58% over the past five trading sessions, and they are down about 70% year to date, as of Thursday's close.
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