First Republic Bank has become the second large regional bank with assets over $200 billion to fail in just a few weeks. Will other banks follow?
The troubled First Republic Bank was closed by US regulators, while its assets are to be acquired by JPMorgan Chase, the Federal Deposit Insurance Corporation said in a statement on May 1, 2023.irst Republic Bank has become the second large regional bank with assets over $200 billion to fail in just a few weeks.
Many of the bank’s accounts had deposits well north of the federally-insured $250,000. Once Silicon Valley Bank went under, clients pulled their money, fearful their deposits were in danger. First Republic said last week that depositors had withdrawn more than $100 billion, most of it during a few days in mid-March.
First Republic planned to sell off unprofitable assets, including low interest mortgages that it provided to wealthy clients. It also announced plans to lay off up to a quarter of its workforce, which totaled about 7,200 employees in late 2022. But those plans were seen as too little, too late, by analysts.
For example, Comerica, based in Dallas, said deposits fell by $3.7 billion after March 9 and the company borrowed $13 billion from federal programs “to provide a buffer in excess of normal operating levels.” Still the company earned $324 million in the first quarter, down slightly from the fourth quarter, but up from $189 million in the year-ago quarter.Comerica shares dropped 37% in the week after Silicon Valley Bank failed, but have remained steady since.
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