First Republic Bank: Shares fall 17% following second credit rating downgrade

The shares of First Republic Bank plummeted over 17% in premarket trading on Monday following news that the embattled bank received its second credit downgrade from S&P Global within a week.

This comes after a shocking 80% decline in First Republic Bank’s shares in the last month. Investors’ fears were triggered by the collapse of Silicon Valley Bank, causing worry in the banking sector. Futures for stock were down to start Monday with the Dow Jones Industrial Average futures dropping by roughly 0.17%, S&P 500 futures 0.15%, and Nasdaq-100 futures 0.15% around 8 a.m.

Although last week saw eleven banks provide First Republic Bank with an infusion of $30 billion, S&P Global downgraded the bank’s credit rating to B+ from BB+ on Sunday. This downgrade comes after the ratings firm had already reduced First Republic Bank’s rating from A- last week. According to the S&P, last week’s developments — which included deposit outflows, increased borrowing from FHLB, and the suspension of its common stock dividend–suggest that the bank was likely under high financial stress.

Last week’s infusion was announced after First Republic Bank’s shares suffered a 71% loss, with this 14th largest bank in the country initially established in 1985. Over two-thirds of the bank’s deposits were uninsured; while the FDIC reassured SVB depositors that they would have access to their money after going over the $250k insured value, first Republic Bank’s deposits didn’t have any such guarantees.

Read more from The Washington Examiner.

Meanwhile, UBS Financial Services plans to buy the beleaguered Swiss bank Credit Suisse, adding to the current market frenzy. Despite this, Treasury Secretary Janet Yellen has stated that the financial system “remains sound and that Americans can feel confident that their deposits will be there when they need them.”

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