Shares of First Republic and Credit Suisse tumble despite new capital

Shares of First Republic and Credit Suisse tumble despite new capital

First Republic Bank and Credit Suisse shares tumbled Friday, a sign investors remain wary of the beaten down banking industry despite public and private measures to stabilize the sector.

The decline in the banks’ stocks resumed downward slides that were interrupted on Thursday when both First Republic and Credit Received received pledges of emergency funding aimed at shoring up their beleaguered finances. First Republic Bank shares plunged 33% on Friday, closing at $23.03, while Credit Suisse slipped 7%, ending the day at $2.01. 

The drops come after First Republic shares gained on Thursday, while Credit Suisse shares were unchanged, reflecting a short-lived reprieve amid deepening concerns about the industry following the sudden collapse last week of Silicon Valley Bank and Signature Bank. 

A consortium of 11 big financial institutions on Thursday committed to provide $30 billion in funding for First Republic Bank, and the Swiss central bank agreeing to provide almost $54 billion to Credit Suisse.

First Republic had reported $176 billion in deposits in December, but its recent borrowing from the Federal Reserve could indicate that depositors are withdrawing their money at a more rapid clip than before, one analyst said.

“In our view, this adds to the fear that other regional banks could see deposit outflows, although we would expect outflows of a far smaller magnitude,” the analyst, Alexander Yokum of CFRA Research, wrote in a note Friday. 

Meanwhile, the Swiss National Bank’s move to recapitalize Credit Suisse has failed to allay concerns about its finances. The capital infusion is unlikely to fix Credit Suisse’s main problem, which is that it hasn’t been profitable in two years, said analysts at Capital Economics. 

Although Credit Suisse has a plan to revive its business over a three-year period, “it is uncertain whether markets will give it that long,” Andrew Kenningham, the chief Europe economist at Capital Economics, said in an investor note Friday. 

Silicon Valley Bank’s former parent company files for bankruptcy


Shares of San Francisco-based First Republic slumped after California regulators seized Silicon Valley Bank on March 10. As with Silicon Valley Bank, a significant share of First Republic’s deposits are uninsured, which makes it more prone…

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