The US banking crisis is deepening with First Republic Bank in free fall

The US banking crisis is deepening with First Republic Bank in free fall

First Republic Bank (FRC) shares lost half their value on Tuesday, April 25, following a disappointing quarterly report.

The embattled bank was the worst performer in the S&P 500 that day as investors sold their shares. Since the beginning of the year, First Republic shares have fallen by 93%.

The bank has become the latest victim of a deepening crisis that has included the collapse or seizure of a number of medium-sized lenders this year. So far in 2023, Silicon Valley Bank, Silvergate and Signature Bank have closed or imploded.

First Republic was at the center of market fears after a surge in deposit outflows, the WSJ reported.

First Republic $FRC 😵‍💫

Down *another* 40% today and now -93% year-to-date. pic.twitter.com/SxJPjTz7m2

— Trading View (@handelsansicht) April 25, 2023

Banks bunkum

On April 24, the bank said it was exploring strategic options after it revealed it had lost around $100 billion in deposits. However, analysts and investors seem to have already lost confidence in them.

Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell urged investors not to panic and said they would support the banking system.

In the first quarter, First Republic raised $92 billion, mostly from the Federal Reserve and government-backed lenders. It effectively replaced lost deposits with loans.

First Republic also received a $30 billion temporary lifeline from major banks like JP Morgan Chase in March.

Additionally, bank executives did little to build trust during a conference call this week. New York University finance professor Aswath Damodaran commented: “This is a trust issue, as is the case with any bank, and when trust is lost, money will flee.”

The contagion appears to have spread to other American banks as concerns grow about another bank-induced financial crisis. PacWest Bancorp shares have fallen about 60% since the beginning of March, and Northern Trust has seen its share price decline.

Bitcoin Boosted by Banking News

Bad news in the banking sector is good news for Bitcoin, which emerged from the last banking crisis in 2008.

BTC has gained around 4% in the last 12 hours and is currently trading at $28,368.

However, the move could be short-lived as Bitcoin is down 6.5% over the past week as crypto markets correct. The $28,000 price zone has now flipped from support to resistance.

.