First Republic Bank suffers highest decline in market value in March

First Republic Bank has experienced a staggering loss of $20.1 billion in a span of just 24 days, from 1 March to 24 March 2023. This financial setback has resulted in a drop in the bank's market value to a mere $2.2 billion, reveals the Company Profiles Database of GlobalData, a leading data and analytics company.

Murthy Grandhi, Company Profiles Analyst at GlobalData, comments: “The European banks withstood the meltdown in banking stocks fairly better following the news of the liquidation of Silvergate Bank on 8 March 2023, sanctions on Silicon Valley Bank (SVB) on 10 March 2023, and the closure of Signature Bank on 12 March 2023”

It is the US banks, which suffered major setback, with share prices tumbling in the first four weeks of March. Out of top 20 banking stocks that lost their market value, 18 banks were from the US. The stock of First Republic Bank has dropped nearly 90% over the four weeks of March because of the bank accounting for large amounts of uninsured deposits exceeding the $250,000 FDIC limit, and subsequent high-volume withdrawals.

To allay the fears of investors about liquidity concerns, a group of 11 US banks agreed to deposit $30 billion in the bank for a minimum of 120 days.

Credit Suisse lost nearly 72% of its market value after the news that Saudi National Bank, the bank's major shareholder, was unwilling to invest more due to regulatory rules. This ultimately resulted in its announced merger with UBS AG.

Due to the extensive media coverage of the regional banking crisis, PacWest Bancorp’s market value declined by 66%. To strengthen liquidity, PacWest borrowed $10.5 billion from the discount window of the Federal Reserve, $3.5 billion from the Federal Home Loan Bank, and $2.1 billion from the Bank Term Funding Program that the Federal Reserve established in response to the collapse of Signature Bank and SVB.

Grandhi concludes: “Investors will witness a few more potential banking contagions because of the current dominance of emotion and sentiment in the banking sector. Deutsche Bank is in the spotlight due to spill over concerns, which led to a 200 bps increase in credit default swaps, the highest level since 2019.”