2023-04-25 20:21:04
Dhe US regional bank First Republic experienced a dramatic outflow of customer deposits in March. As their quarterly report now shows, around $102 billion was withdrawn within a short period of time, which corresponded to more than half of the total deposits and was also more than expected.
The massive cash outflow reflects a panic reaction from customers surrounding the collapse of Silicon Valley Bank and Signature Bank in March. There was concern in the industry at the time that First Republic could be the next regional financial institution to fail. In the quarterly report, the bank now spoke of an “unprecedented outflow of deposits”.
At the end of 2022, these were still around 176 billion dollars, at the end of March it was only 104 billion dollars. This includes $30 billion that the company received in an emergency action from a group of major American banks led by JP Morgan Chase, which means that more than $100 billion in customer funds have just flowed out.
As an encouraging sign, First Republic highlighted that deposits have remained broadly stable since late March. In March, the bank was forced to take out expensive loans, including from the US Federal Reserve, because of its shrinking deposit portfolio. As she has now announced, because of the “recent events” she wants to launch an extensive austerity program, which should include the reduction of 20 to 25 percent of all jobs. First Republic shares fell more than 40 percent at times on Tuesday. Since the beginning of March, the share has lost around 90 percent of its value.
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