The market is cautioned by the fact that the further drop in the share price occurred after 11 other banks pledged to place 30 billion dollars in deposits with the financial institution, providing it with liquidity assistance. THE CNBC concerns that this infusion will not be enough to further strengthen the First Republic.
“This move by America’s largest banks reflects their confidence in First Republic and banks of all sizes, and demonstrates the banks’ overall commitment to serving their customers and communities,” the group, which includes banks Goldman Sachs, Morgan Stanley and Citigroup, said in a statement.
Atlantic Equities, on the other hand, downgraded First Republic to neutral, noting that the bank may need an additional $5 billion in capital. “Management is exploring various strategic options, which may include the sale of all or parts of the loan portfolio. The limited information provided suggests that the balance sheet has grown significantly, which may necessitate a capital increase,” wrote analyst John Heagerty.
Analysts at Wedbush gave First Republic a straight $5 price target, compared to the current price of $34, saying that a takeover could wipe out much of the shareholder value, as the sale of a distressed company would result in minimal or no residual value for common shareholders. in case of book value.
In the course of a few days, the bank’s share price fell by a quarter.
Cover photo: Tayfun Coskun/Anadolu Agency via Getty Images
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