First Republic Bank Is Said to Be Exploring a Potential Sale

First Republic Bank, a midsize lender whose shares have plunged this week amid broader banking turmoil, is exploring extreme measures including a possible sale, a person familiar with the matter said, indicating that the bank’s moves over the weekend to strengthen its balance sheet may not have been enough to calm investors’ concerns.

The bank is considering other alternatives, like an infusion of cash, said the person, who spoke on condition of anonymity because the process is confidential. No deal is certain, the person added.

A spokesman for First Republic did not immediately respond to a request for comment. Bloomberg News earlier reported that First Republic was considering options including a sale.

Despite its efforts in recent days to shore up its finances, First Republic, a San Francisco-based lender known for its affluent customer base, has remained a concern because it shares many similarities with Silicon Valley Bank, the bank that was seized by federal regulators last week. The collapse of Silicon Valley Bank was in part a result of an excess amount of unsecured deposits and investments in long-term bonds that had fallen in value.

Shares of First Republic have plunged about 70 percent over the past five days, giving it a market value of $5.7 billion. The bank’s credit rating was downgraded to junk by S&P Global Ratings on Tuesday.

Other U.S. regional banks that have battled market turmoil faced renewed pressure on Thursday. Shares of PacWest Bancorp dropped more than 10 percent at market open, and East West Bancorp fell 5 percent. By contrast, the biggest banks, like JPMorgan Chase and Bank of America, posted smaller declines.

On Sunday, First Republic announced that it had secured access to about $70 billion in additional liquidity from the Federal Reserve and JPMorgan Chase. That came on top of funding it has access to as part of an emergency government backstop program created to stem the fallout from the failure of Silicon Valley Bank.

The bank has sought to reassure investors and customers of its fortitude.

“First Republic’s capital and liquidity positions are very strong, and its capital remains well above the regulatory threshold for well-capitalized banks,” the bank said in a statement on Sunday.

On Monday, the firm’s chairman, James H. Herbert II, told CNBC in an off-camera interview that it was not seeing an unusual number of depositors flee.

But it is not clear that concerns over the stability of regional banks have been allayed by actions by the federal government.

This post was originally published on NY Times

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