Shares of First Republic Bank fell sharply in early trading this morning after the company’s trades were halted on volatility that fueled the financial crisis despite government activity over the weekend to resolve the Silicon Valley bank crisis and potential cascading effects. Investor uneasiness grew with the institution. , The volatility comes just days after a stock market selloff that previewed SVB’s failure, as concern of contagion remains among analysts and the tech community more broadly.
As of the time of writing, First Republic’s equity shares are off by more than 65%, and trading has been halted as noted.
In an effort to get ahead of investor concern, First Republic over the weekend announced that it had bolstered its financial position through “additional liquidity” raised from the Federal Reserve and JPMorgan Chase. According to the company’s statement on March 12, it had “over $70 billion” in unused liquidity “to fund operations”. It is possible that there is a possible loss of capital and investor confidence standing against the sale of the company.
The simple question facing every startup and small business that has lost faith in the stability of financial institutions over the past week is: Where is a safe place to park my money? First Republic Bank is one of those options since the death of SVB, which claims it will be home to half of all US venture-backed startups in 2022. Finally, the decline of stocks can be seen as a concerning sign; On the other hand, other regional banks also – including Western Alliance and PacWest – appear to be taking a trading hit, as uncertainty engulfs business operations for the near future.
The move comes despite the announcement from the FDIC, the Treasury Department and the Federal Reserve that depositors at the Silicon Valley bank will be catered for on Sunday. His actions averted a potential crisis of thousands of businesses that were unable to make payroll or operate as usual. However, this despite the Federal Reserve announcing that it would continue to provide additional funding to eligible depository institutions through a “new bank term funding program” to “help ensure banks’ ability to meet the needs of all their depositors”. Plan” announced. [that will offer] loans of up to one year,” it appears that many public market investors are still looking to exit smaller banks.
At this juncture it is worth considering what the morning markets would look like without quick action by the government to stem the bleeding.
What is your reaction to the collapse of SVB? What are you saying to your fellow employees, portfolio companies, founders and investors? For tips and ideas, you can reach Natasha Mascarenhas on Twitter @nmasc_ or Signal at +1 925 271 0912. Her email is [email protected] Anonymity requests will be honored.