It means that lending money to the bank is one of the riskier investments. The downgrade follows the collapse of Silicon Valley Bank (SVB) in San Francisco and Signature Bank in New York. Both lenders had to deal with customers who came to claim their credits from the bank en masse.
According to S&P Global, First Republic is more risky than comparable banks in the United States. This is because the entire group of account holders at this bank is less diverse than at comparable peers.
previous criticism
The very one-sided group of depositors at SVB has already led to criticism. This bank mainly attracted customers from the tech and start-up world around San Francisco. But due to the less favorable economic outlook, these companies in particular needed more of their assets, which resulted in an above-average outflow of money.
First Republic is the 14th largest bank in the United States by balance sheet size. The San Francisco bank has $212 billion in investments and more than $176 billion in deposits.