First Republic Shares Resume Slide as Investors Assess Aid

First Republic Bank shares tumbled again on Friday, set for their worst week ever, as sentiment around the lender remained fragile even after proposals for $30 billion of aid from Wall Street’s biggest banks.

(Bloomberg) — First Republic Bank shares tumbled again on Friday, set for their worst week ever, as sentiment around the lender remained fragile even after proposals for $30 billion of aid from Wall Street’s biggest banks.

Shares of First Republic fell as much as 17% in premarket trading, underperforming fellow regional banks, having already fallen by a record 60% so far this week. The losses follow a volatile session on Thursday, when the stock plunged as much as 36% before ending the day with a 10% gain after the biggest banks on Wall Street, including JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co., pledged $30 billion of fresh cash for the lender.

However, shares resumed their slide is after hours trading after it disclosed that its borrowings from the US Federal Reserve varied from $20 billion to $109 billion from March 10 to March 15. First Republic also said it was suspending dividend payments and disclosed a dwindling cash position.

Most other regional banks are also down on Friday, with PacWest Bancorp falling 5.6% in premarket trading, Western Alliance Bancorp dropping 2.5% and KeyCorp down 1.5%. Meanwhile, the SPDR S&P Regional Banking ETF fell as much as 2.6%. 

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

Analysts also have concerns. Wedbush analyst David Chiaverini downgraded First Republic to neutral, saying it’s difficult to “come up with a realistic scenario where there’s residual value for FRC common equity holders” in the event of a sale. He cut his price target on the stock to $5 from $140. Piper Sandler & Co’s Andrew Liesch was of a similar opinion, noting that while the infusion should help assuage investor concerns, First Republic’s earnings power could take a hit going forward, given that the fresh funds are being added at market rates. 

First Republic’s shares have been hit hard by the turmoil in the banking sector, after the demise of three lenders, including Silicon Valley Bank, knocked confidence in the industry and saw customers of regional lenders pull deposits. A meltdown in Credit Suisse Group AG’s shares on worries over the bank’s financial health further dampened sentiment.

Read More: First Republic Goes From Wall Street Raider to Rescue Target

(Updates with stock move and Wedbush downgrade)

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