2023-04-26 03:51:00
the american bank First Republic He is experiencing a context of concern for his future after plunging 49 percent on Wall Street due to the withdrawal of more than 100,000 million dollars in deposits.
The listing of its shares was repeatedly suspended during the day on the New York Stock Exchange, after the publication of the firm’s results with data that discouraged the market. The debacle of this Tuesday, April 25, means that First Republic has lost more than 90% of its market capitalization since the beginning of March.
The entity, designated during the crisis opened by the collapse of Silicon Valley Bank (SVB) and Signature Bank, registered a ‘haemorrhage’ in its deposits in the first quarter of the year with the withdrawal of almost 58% of the money that the entity recorded in the previous quarter, according to the accounts published by the entity.
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The deposit figure recorded by First Republic Bank at the end of the quarter was 104,474 million dollars (94,498 million euros), with the proviso that this amount includes the 30,000 million dollars (27,135 million euros) from the injection of funds provided to the entity by the largest US banks.
It is that, to avoid contagion of panic, eleven large banks weeks ago deposited a total of 30,000 million dollars in First Republic accounts.
Despite measures by authorities and competitors to defuse the crisis, many clients chose to place their money in larger banks considered too big for the federal state to let fail.
In this way, discounting this injection, the regional bank recorded the outflow of 101,963 million dollars (92,226 million euros) compared to the 176,437 million dollars (159,589 million euros) in deposits recorded at the end of the fourth quarter of 2022.
“Deposit activity began to stabilize from the week of March 27, 2023 and has remained stable until Friday, April 21, 2023,” said the entity, which on April 21 had deposits for an amount of 102,700 million dollars (92,893 million euros), only 1.7% less than on March 31, 2023.
The US bank reported that in the first three months of the year it reached a net profit of 269 million dollars (243 million euros), 32.9% less than in the same period of 2022.
First Republic Bank revenues fell 13.4% in the quarter compared to a year earlier, to 1,209 million dollars (1,093 million euros), including a 19.4% drop in net interest income, which totaled 923 million dollars (835 million euros).
“As a result of recent events, the bank is taking actions to strengthen its business and restructure its balance sheet,” the entity explained, referring to efforts to increase insured deposits, reduce Federal Reserve Bank loans, and reduce balances. of loans to correspond with less reliance on uninsured deposits.
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Reduction of expenses and personnel: the measures of First Republic Bank against the crisis
Through these actions, First Republic Bank intends to reduce the size of its balance sheet, reduce its reliance on short-term borrowing, and address the challenges it continues to face.
On the other hand, the entity is also taking steps to reduce its expenses, including significant reductions in executive compensation, the condensation of corporate office space and the reduction of non-core projects and activities.
This will also affect employees: the bank expects to reduce its workforce of around 7,200 by about 20-25% in the second quarter.
The bank had already suffered a heavy blow on Wall Street in mid-March after the liquidation of another bank, Silvergate, a bankruptcy followed by those of Silicon Valley Bank (SVB) and Signature Bank.
AG / ED
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