(Bloomberg) — First Republic Bank shares ended lower Friday on the heels of another downgrade and as financial turmoil spread to a European lender, deepening concern about the banking sector.
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The shares whipsawed early in its third straight session of intraday flip-flopping, after settling down 1.4%. Moody’s lowered the bank’s originator assessment late Thursday and placed the stock on review for possible further downgrades.
First Republic logged its third consecutive week of double-digit losses amid the upheaval in the industry. The shares have dropped about 90% this year and erased roughly $20 billion of market value. The swift demise of multiple US banks, including Silicon Valley Bank, has sparked worries over liquidity and spurred clients to pull funds.
First Republic has been eyed as particularly vulnerable, with the possibility of a government-backed rescue effort by big banks doing little to stem the shares’ slide.
Most regional lenders rose Friday after Treasury Secretary Janet Yellen said a day earlier regulators would be prepared to take additional steps to guard deposits if warranted. Liquidity issues at mid-size banks seem to be mitigating, partially aided by borrowings from the newly established Bank Term Funding Program, created to provide an additional source of funding.
“We view the fact that total loans at the discount window and the BTFP were relatively flat week over week as a sign of some stabilization,” said Piper Sandler analyst Casey Whitman.
Deutsche Bank AG weighed on US financial stocks in early trading, after the stock slumped as much as 15% in European trading — the biggest decline since the early days of the pandemic in March 2020 — after the German lender said it was looking to redeem a tier 2 subordinated bond early.
The volatile trading was evident among other US regional banks as well. PacWest Bancorp sank as much as 6% before ending the day 3% higher. Western Alliance Bancorp saw similarly choppy trading, swinging between losses of roughly 6% and ending Friday with a gain of more than 5%. Meanwhile, larger lenders were lower, with Morgan Stanley falling 2%, and JPMorgan and Wells Fargo falling 1%.
(Updates with Friday trading.)
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