First Republic Whiplashes Investors As Bank Concerns Linger

(Bloomberg) -- First Republic Bank shares whiplashed investors again Friday on the heels of another downgrade and as financial turmoil spread to a European lender, deepening concern about the banking sector.

The shares briefly turned positive after earlier falling as much as 5.8%, its third straight session of intraday flip-flopping. Moody’s lowered the bank’s originator assessment late Thursday and placed the stock on review for possible further downgrades. 

First Republic is on track for its third consecutive week of double-digit losses amid the upheaval in the industry. The shares have dropped about 90% this year and erased roughly $20 billion of market value. The swift demise of multiple US banks, including Silicon Valley Bank, has sparked worries over liquidity and spurred clients to pull funds.

Banks stocks slid despite Treasury Secretary Janet Yellen saying Thursday regulators would be prepared to take additional steps to guard deposits if warranted. First Republic has been eyed as particularly vulnerable, with the possibility of a government-backed rescue effort by big banks doing little to stem the shares’ slide.

“The banking crisis is far from over and the impact on credit conditions and the economy will likely be felt over the next six months,” said Peter Garnry, a strategist at Saxo Bank.

Adding to the pressure on the broader financial sector, Deutsche Bank AG slumped as much as 15% in European trading — the biggest decline since the early days of the pandemic in March 2020 — after the German lender said it was looking to redeem a tier 2 subordinated bond early.

The volatile trading was evident among other US regional banks as well. PacWest Bancorp sank as much as 6% before turning higher by nearly 5%. Western Alliance Bancorp saw similarly choppy trading, swinging between losses of roughly 6% and a gain of more than 4%. Meanwhile, larger lenders were lower, with the KBW Bank Index falling as much as 2.4%.

(Updates with Friday trading.)

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.