First Republic's shares dropped following over $100bn worth of withdrawals

First Republic Bank is a mid-size bank based in San Francisco, California, USA. It was founded in 1985 and has grown through mergers and acquisitions over the years.

The bank offers a range of financial products and services, including private banking, wealth management, personal and business lending, and trust and custody services.

First Republic Bank is known for its high-touch customer service and focus on building long-term relationships with its clients. As of 2023, the bank has more than 100 branches across the US and manages over $200 billion in assets.

First Republic’s shares plummeted almost 50% as investors express doubt about the bank’s future following news that customers withdrew over $100bn from their accounts during the recent banking panic.

After a string of bank collapses created concerns of a crisis in the sector, First Republic was considered one of the banks with the highest risk of failure.

The multi-billion dollar rescue deal helped stabilize the firm which provided a glimpse of how rapidly the concerns spread.

Following the series of bank collapses, First Republic lost around 40% of its deposits as customers hurried to withdraw their funds.

By the end of March, First Republic had around $104bn in deposits, which included $30bn from other banks in a rescue plan designed to restore confidence.

Rewritten: First Republic announced that the situation has stabilized and is exploring options to strengthen its position, including reducing costs by cutting 20% to 25% of its workforce in the coming months.

Last month, the collapse of Silicon Valley Bank, the 16th-largest lender in the US, marked the biggest failure of a US bank since 2008, revealing issues in the banking sector.

After the collapses of Silicon Valley Bank and New York’s Signature Bank, authorities intervened to guarantee deposits beyond the usual limits to prevent further runs on bank deposits.

Despite the guarantee of deposits beyond limits, concerns continued to spread after the failures of banks in the US. In Europe, Credit Suisse also faced a rescue deal brokered by Swiss officials after it experienced 61.2bn Swiss francs ($69bn; £55.2bn) in outflows in Q1 2023.

Central banks worldwide, such as the US Federal Reserve and the Bank of England, have raised interest rates significantly to address inflation.

Banks’ bond portfolios have suffered from the sharp increases in interest rates by central banks worldwide.

The collapse of Silicon Valley Bank, triggered by customers withdrawing funds due to financial concerns, led to fears about other firms in the industry.

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By Ryan

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