FIRST REPUBLIC BANK BANKRUN

- Overview of First Republic Bank

- Bankrun

- 30 Billion Rescue deal

- Share price action timeline

- Why is Bitcoin pumping?

- Recovery plans

- Investors concerns

First Republic Bank is a private bank founded in 1985 and headquartered in San Francisco, California. The bank specializes in providing personalized banking, private wealth management, and lending services to high-net-worth individuals, businesses, and nonprofit organizations. First Republic Bank operates more than 80 offices across the United States and serves clients in major metropolitan areas including New York City, Los Angeles, San Francisco, and Boston. With a focus on exceptional customer service and relationship-based banking, First Republic Bank has become a trusted financial partner for many individuals and businesses seeking a unique and customized approach to banking. The United States 14'th Largest bank. It had 212 Billion USD in assets at the year-end of 2022

The recent banking failure events have triggered massive panic among depositors and investors across the globe. First Republic Bank became the next victim of bank runs. Overall 100 Billion USD were withdrawn by customers from their accounts.

First Republic Bank was viewed as a bank prone to failure after a series of banking collapses. It was stabilised by a multi-billion dollar rescue deal.

Greater than 100 Billion USD in deposits were withdrawn from RFB in the first quarter of 2023 as per reported quarterly earnings. Deposits were down by nearly 59% in the first quarter of 2023. The quarterly earnings report announcement on 24 April 2023 spooked investors. As they began to question the bank's liquidity position. Investors began to sell their stake causing the stock price to tumble by 50% on the next day.

FRB Earnings Release Q1 2023

.pdf

Download PDF • 228KB

30 Billion rescue package by a consortium of 11 banks. The support was given to strengthen Republic First Bank's liquidity position.

16 March 2023

A consortium of 11 Banks

5 Billion USD Injection: Wells Fargo, Bank of America, Citigroup, JPMorgan Chase

2.5 Billion USD Injection: Goldman Sachs & Morgan Stanley

1 Billion USD Injection: Truist, PNC, U.S Bancorp, State Street, Bank of New York Mellon

However, the rescue deal did not stop damage as stocks continued to tumble. 33% of the bank's market capitalization was wiped off on 17 March 2023 as the rescue deal raised concerns about the bank's financial health and future operation. FRC shares closed at 16 USD on the day of Quarterly earning reports were announced. As the financial report was published on 24 April 2023, the bank's true crisis came to light then investors began to dump their stake in FRC at large. This resulted in a further 50% decline in the share price.

FRB Stock ticker: FRC => Share price action Timeline (Closing vs Closing)

Source: https://finance.yahoo.com/quote/FRC/history/

24 APRIL 2023:BANKRUN ANNOUNCEMENT

Why is Bitcoin pumping?

Bitcoin's Price is up by nearly 6% since the bank run announcement was made. Each time a bankrun occurs, the crypto community rejoices as cryptocurrencies start to spike.

How is this possible in a Bear market?

Bitcoin operates on a decentralized protocol that is not subject to the same regulations and controls as traditional financial institutions. This could make it a more attractive alternative to people who have lost trust in the banking system and are looking for a more secure and transparent way to store and transfer their wealth.

Recovery plans

Investors concerns

Whether it has plans to continue operating as an independent entity or join a larger lending institution via acquisition. If the latter, the buyer will be looking for a huge write-down in the value of the bank's assets. The Head of North American banks, Christopher Wolfe at Fitch Ratings said that the options might be costly and challenging.

Reference:

Sherman, B. A. L. &. N. (2023, April 25). First Republic: Shares fall after more than $100bn of withdrawals. BBC News. https://www.bbc.com/news/business-65382231

Deutsche Welle. (2023, March 16). US banks rally to support First Republic Bank amid crunch – DW – 03/16/2023. dw.com. https://www.dw.com/en/us-banks-rally-to-support-first-republic-bank-amid-crunch/a-65019637