First Republic shares tumble even after receiving $30 billion in bailouts

First Republic (FR) stock quotes sank more than 20% at the opening of trading on the NASDAQ, despite the fact that on the eve of the bank received aid for $30 billion.

The news of First Republic being bailed out by other banks did little to inspire investors with optimism. A few hours later, FR published statementfiled with the US Securities and Exchange Commission (SEC). In it, bank founder Jim Helbert and CEO Mike Roffler thanked the 11 banks that agreed to help FR through a difficult situation and called the move a sign of trust. However, the same statement to the SEC shows that First Republic had $34 billion in cash on March 15.

This amount did not yet include $ 30 billion, which the bank will only receive from other market participants as part of the government’s rescue program. From March 10 to March 15, First Republic borrowing from the Federal Reserve ranged from $20 billion to $109 billion at an overnight interest rate of 4.75% per annum. In addition, the bank had to increase its short-term loans from the Federal Home Loan Bank by $10 billion at an even higher rate of 5.09%. In other words, the bank’s entire cash reserve by March 15 was secured exclusively by new loans. Finally, FR announced a suspension of dividend payments given the bank’s difficult financial situation.

As previously reported, FR management is now considering selling its business.

Kirill Sarkhanyants