First Republic Bank dominated declines in bank stocks on Monday that came despite an extraordinary move by regulators on Sunday afternoon to help all depositors at Silicon Valley Bank and Signature Bank.
First Republic shares lost 65% in premarket trading Monday after slumping 33% last week. PacWest Bancorp fell 24%, and Western Alliance Bancorp lost 61% in the premarket. Zions Bancorporation fell 21%, while KeyCorp fell 12%. Bank of America lost 4% in premarket trading, while Charles Schwab fell 8% on Monday.
The Federal Reserve created a new Bank Term Financing Program that would offer loans of up to one year to banks as collateral. The central bank also relaxed its conditions.
First Republic said it has received additional liquidity from the Federal Reserve and JPMorgan Chase. The bank said the move boosted its unused liquidity to $70 billion, before any funding it could get from the new Fed facility.
The SPDR S&P Regional Banking ETF lost 4% in premarket trading Monday following last week's 16% decline.
The decline for regional bank stocks on Monday came after a hasty withdrawal of p. The main issue is the high percentage of SVB's uninsured deposits, as the majority of the bank's customers are not guaranteed to get their money back before the regulatory measures at the weekend.
In a fragile environment like ours, we believe banks should be cautious about the potential negative signaling effect of raising deposit rates to keep deposits," said Citi analyst Keith Horowitz.
SVB is a U.S. bank failure. largest since 2008, with $212 billion in assets. First Republic reported about $213 billion in assets as of Dec. 31, according to securities filings.
Although First Republic is not as focused on one industry as SVB is with technology, the bank tends to cater to businesses and wealthy individuals who tend to have large uninsured deposits.
