First Republic Shares Resume Slide as Investors Assess Aid

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(Bloomberg) — Shares of First Republic Bank fell again on Friday, set for its worst week ever, as uncertainty surrounding the lender continued despite offers of $30 billion aid from Wall Street’s biggest banks. The sentiment remains fragile.

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First Republic shares fell as much as 15% US premarket trading, underperforming fellow regional banks, which have fallen a record 60% so far this week. The losses follow a volatile session on Thursday, after Wall Street’s biggest banks including JPMorgan Chase & Co, Bank of America Corp, Citigroup plunged as much as 36% before ending the day with 10% gains . Inc. and Wells Fargo & Co. pledged $30 billion in fresh cash to the lender.

However First Republic shares resumed their slide post-market after it disclosed that its borrowings from the US Federal Reserve had varied from $20 billion to $109 billion from March 10 to March 15.

Other regional banks were mixed, with PacWest Bancorp falling 2% premarket trading, while Western Union Alliance Bancorp reversed earlier losses to trade 2.7% higher.

Some investors questioned the move to aid First Republic. Pershing Square’s Bill Ackman, for example, said a tweet that it was “bad policy” to spread the risk of financial contagion to gain a “false sense of confidence” in the lender.

Analysts were worried too. Andrew Lish of Piper Sandler & Co. said that, while the infusion should help ease investor concerns, First Republic’s earnings power could grow further, given that new funds are being added at market rates. Jefferies analyst Ken Usdin had a similar view, saying that the company’s earnings profile is “clearly impaired”, although the new deposits will give the company time to figure out a sale.

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Shares of First Republic have been hit hard by turmoil the banking sector, after the demise of three lenders including the Silicon Valley bank, eroded confidence in the industry and pulled deposits from customers at regional lenders.

Sentiment worsened as AG shares declined on concerns about the bank’s financial health

First Republic has suspended dividend payments and disclosed a dwindling cash position.

Read more: First Republic goes from Wall Street raider to rescue target

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