Shares of First Republic Bank plunged nearly 40 percent in premarket trading on Monday, days after it was announced that the struggling lender receiving a $30 billion lifeline from some of the largest banks in the US.
Before the bell, shares of the bank, which has emerged as one of the leading indicators of current banking volatility, fell as much as 37 percent, extending a ten-day run that has seen its value fall a full 80 percent in matter of days
Stocks have since rallied slightly by 8:30am, while several banks that reeled from the recent SVB collapse saw some stabilization, after US officials insisted deposit outflows had slowed last week. pass.
Since SVB’s fall, depositors have been fleeing regional lenders in droves, causing a domino effect that has threatened to upend the US economy and several banks, including First Republic.
On Friday, in an unprecedented show of support from 11 baking giants including JPMorgan Chase and Bank of America, the bank received its multi-billion dollar lifeline, at the time hailed by the US Treasury as “very welcome.” and demonstrative of the ‘resilience’ of the US banking system.
Shares of First Republic Bank plunged nearly 40 percent in premarket trading on Monday, days after it was announced that the struggling lender would receive a $30 billion lifeline from some of the world’s biggest banks. big usa
Before the bell, shares of the bank, which has emerged as one of the leading indicators of current banking volatility, fell as much as 37 percent, extending a ten-day run that has seen its value fall a full 80 percent in matter of days
The recent movement in its share price seems to indicate otherwise, and that the unsecured cash injection may not be enough to solve its growing crisis.
Traders have raised bets that the Fed is likely to pause rate hikes on Wednesday to ensure financial stability, as the back-to-back collapse of SVB and Signature Bank threatens to escalate into a major crisis.
Over the weekend, UBS agreed to buy rival Credit Suisse for $3.23 billion in a forced merger engineered by Swiss authorities to prevent further turbulence in the global banking market.
US-listed shares of Credit Suisse were down 58.4% in premarket trading and opened at a new all-time low, while UBS shares were down 3.6% as attention focused on the impact of the acquisition on some Credit Suisse bondholders.
Still, US stock futures were off their session lows. A drop in Treasury yields on bets on less-aggressive Fed policy moves supported gains in some growth and technology stocks like Apple and Microsoft.
“Traders are looking for near-term opportunities ahead of the Fed meeting on Wednesday,” said Jason Pride, director of private equity investments at Glenmede.
“Investors are still worried about the banking industry, despite UBS agreeing to take over Credit Suisse. They’re still a bit worried that there are other banks that need to be beefed up that we’re just not familiar with.’
US-listed shares of Credit Suisse were down 58.4% in premarket trading and opened at a new all-time low, while UBS shares were down 3.6% as attention focused on the impact of the acquisition on some Credit Suisse bondholders.
Traders’ bets are now leaning toward a no-raise scenario, with 39% expecting the Federal Reserve to raise rates by 25 basis points.
Investors also expect economic data including existing home sales, weekly jobless claims and durable goods this week to gauge the strength of the US economy.
As of 6:44 am ET, the Dow e-minis were up 10 points, or 0.03%, the S&P 500 e-minis were up 3.5 points, or 0.09%, and the e-minis The Nasdaq 100 rose 13.25 points, or 0.1%.
Major central banks also moved on Sunday to boost cash flow around the world, with the Fed offering daily currency swaps to ensure banks in Canada, Britain, Japan, Switzerland and the eurozone have the dollars they need to operate.
Big US banks like JPMorgan Chase & Co, Citigroup and Morgan Stanley fell between 0.2% and 1.2%.
Regional bank First Republic Bank fell 19.1% after paring some declines, while its peer Western Alliance Bancorp was down 0.7%.
Shares of PacWest Bancorp, however, rose 6.3%.
The S&P Bank Index and the KBW Regional Bank Index posted their biggest drop in two weeks since March 2020 on Friday.
