The First Republic Bank falls 40% on the stock market and raises the specter of bankruptcy

The specter of bankruptcy is looming the first republic bank, one of the entities most affected by the recent banking crisis in the United States. The bank’s shares sank more than 40 percent on Wall Street this Friday, the last straw for a hemorrhaging that is already 97 percent this year. This is how the market reacted this Friday after it was pointed out by sources consulted by CNBC there is less and less chance that the First Republic reach a bailout deal that could keep it afloat. In fact, the Federal Deposit Insurance Corporation will most likely declare bankruptcy within the next few days.

On March 16, the First Republic was saved by the US authorities and major banks (including JPMorgan, Bank of America and Morgan Stanley) with a joint injection of 30,000 million dollars. But the aid was not enough to avert the crisis. The entity’s quarterly accounts, which were presented this Monday, showed a hole that was difficult to fix. The results made more than clear the heavy impact the bank suffered from the banking panic in March, which saw it lose more than 40% of the money it deposited, to $104.5 billion. And that figure includes the 30,000 million dollars given by the big American banks, without which the disaster would have been even greater, close to 100,000 dollars.

The bleeding didn’t stop there. The First Republic also suffered a sharp drop in collections and its advantages. The messages of calm that bank managers tried to send to the market were useless. They assure that the situation is stabilized. Of course, they recognize that the outlook for the future is complex because of the large loans it has had to take out in recent weeks to cope with the outflow of deposits.

Some voices have already intoned my fault. The Federal Reserve (Fed) has been self-critical about its handling of the recent banking crisis, admitting that its oversight of the Silicon Valley bank — the first to fail and trigger the chain crisis — was inadequate. He admitted his mistake, but also wanted to put part of the blame on the shoulders of the bank’s management, which he accused of “not managing the risks” it was exposed to.

On Friday, the Fed released a report on Silicon Valley’s decline, a text in which it concluded that supervisors did not take “sufficient steps” to ensure that the bank could quickly fix its problems when it discovered them.