First Republic Bank shares rose on Thursday along with banking peers, rebounding off the prior day’s losses that stemmed from disappointment over comments from Treasury Secretary Janet Yellen on bank deposits.
(Bloomberg) — First Republic Bank shares rose on Thursday along with banking peers, rebounding off the prior day’s losses that stemmed from disappointment over comments from Treasury Secretary Janet Yellen on bank deposits.
The lender’s shares rose by as much as 11% in premarket trading, leading a broader rise across lenders’ stocks. The gains for the California firm pale in comparison to the loss of 89% it had sustained this year through Wednesday’s close, which had erased nearly $20 billion from its market capitalization.
Regional banking peers Western Alliance Bancorp and PacWest Bancorp also traded higher in premarket, advancing as much as 8.3% and 7% respectively. The SPDR S&P Regional Banking ETF gained 3.2% in early trading, after tumbling 29% this month through Wednesday’s close.
“Every day without a bank failure is a win for the sector,” said Chris Marinac, an analyst at Janney Montgomery Scott. He holds a buy rating on PacWest.
Banking stocks had come under pressure on Wednesday after Yellen said regulators aren’t looking to provide “blanket” deposit insurance to stabilize the US banking system, while Federal Reserve Chair Jerome Powell’s determination to curb inflation dashed hopes of rate cuts this year.
California-based First Republic, known for serving wealthy executives in the technology industry, has plummeted over the past two-and-a-half weeks amid growing turmoil in the industry. The swift demise of three banks, including Silicon Valley Bank, spurred worries over liquidity and saw clients pull funds.
Wall Street lenders and US officials are looking at the possibility of government backing to encourage a deal that would shore up First Republic, Bloomberg News reported earlier this week, citing people with knowledge of the situation.
Sentiment remains fragile, however. Fitch Ratings downgraded First Republic, citing its new more costly funding profile, with the move following S&P Global Inc.’s downgrade of the company over the weekend. Citi analysts moved the lender’s rating to “under review” on Wednesday given volatility in the shares.
(Updates to add latest trading and analyst commentary.)
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