Still runnin'
Although the run on Silicon Valley Bank happened over a month ago, the impact on other lenders is still being felt. This week the ailing First Republic Bank reported a staggering 40% drop off in deposits for the most recent quarter, undoing two-and-a-half years of growth and sending shares down a staggering 49% yesterday.
The plunge meant that First Republic was holding $104.7 billion in deposits at the end of Q1, a figure that would have been substantially lower were it not for a $30 billion rescue package from 11 larger banks back in March.
Trust fall
The bank, founded in 1985, is taking drastic action to try and stay afloat. However, plans to cut 25% of staff and slash execs’ wages to get its balance sheet in order could be too little too late if trust in the bank isn't restored and the flood of withdrawals continues. The company's shares closed at $8.10 on Tuesday, down nearly 95% from the same point last year, suggesting that investors' hope that the ship can be righted has almost completely evaporated.
The company is now reportedly exploring asset sales, with ongoing discussions between First Republic and the government, as well as some of the larger banks involved in the $30bn rescue package. The race is on to save America’s most beleaguered bank.
