First Republic Bank was cut to junk by S&P Global Ratings amid concern that clients pull holdings, after U.S. regulators pledged support for the banking sector.
First Republic Bank was cut to junk by S&P Global Ratings amid concern that clients pull holdings from the lender, a move that comes after U.S. regulators pledged support for the banking sector.
“The bank’s business position will suffer after the volatile swings in its stock price and heightened media attention surrounding deposit volatility,” S&P analysts Nicholas Wetzel and Rian Pressman wrote. “Its business stability has weakened as market perceptions of its creditworthiness have declined.”Shares of First Republic slumped by as much as 26% Wednesday, with other regional banks also lower in another volatile day of trading. First Republic pared the drop to 7.1% as of 10:16 a.m.
S&P expects the lender to ramp up wholesale funding in the aftermath of collapses at Silvergate Capital, SVB Financial Group’s Silicon Valley Bank and Signature Bank. The move stands to hit both interest margin and profitability, the analysts wrote.
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