First Republic shares slide further on liquidity concerns

To the actions of First Republic Bank plunged about 30% on Monday, extending a recent slump, on heightened liquidity concerns after news that the regional bank may raise new funds, even after a $30 billion bailout last week.

The risk rating agency S&P Global cut the bank’s rating on Sunday, depriving First Republic of investment grade, and said the recent injection of funds by 11 major banks of the U.S may not solve the institution’s liquidity problems.

San Francisco-based First Republic is in talks to raise capital from other banks or private equity firms through the issuance of new shares, and could also be negotiating a sale, the New York Times reported late on Friday.

On Sunday, the Reuters published that the bank was still trying to carry out a capital increase, but the transaction was not imminent.

Around 13:10 (Brasilia time) this Monday, the bank’s shares fell 29.87%, having extended the fall in the early afternoon.

The president of JPMorganJamie Dimon, is conducting talks with the heads of other major banks about further efforts to stabilize the First Republic, the Wall Street Journal reported on Monday, citing people familiar with the matter.

“The market wants a more conclusive resolution to what happens to First Republic and the only way out is some sort of asset sale,” said Matt Orton, chief market strategist at Raymond James Investment Management.

First Republic shares have melted 80% in the past seven sessions on fears of a massive outflow from the institution as a large proportion of the bank’s deposits are uninsured.

Meanwhile, shares in other US banks largely rallied on Monday, along with their European peers, following the Swiss government-sponsored takeover of Credit Suisse by UBS.