It is the second\u002Dbiggest bank failure in U.S. history, behind only Washington Mutual, which collapsed in the 2008 financial crisis
Regulators worked through the weekend to find a way forward before U.S. stock markets opened. Markets in many parts of the world were closed for May 1 holidays Monday. The two markets in Asia that were open, in Tokyo and Sydney, rose.
At the end of last year, the Federal Reserve ranked it 14th in size among U.S. commercial banks. The FDIC estimated its deposit insurance fund would take a $13 billion hit from taking First Republic into receivership. Its rescue of Silicon Valley Bank cost the fund a record $20 billion.Article content
Those fears were crystalized in the bank’s recent quarterly results. First Republic experienced a modern day bank run as customers rushed to pull out more than $100 billion in deposits following the failure of Silicon Valley and Signature Bank. Unlike bank runs throughout history, First Republic’s demise was fueled by the speed of social media and digital withdrawals that can be made in seconds from a cell phone.
Investors were skeptical, and the devastating quarterly report sent them running for the exits. First Republic shares fell 75% last week and closed Friday at $3.51. Any remaining shareholders are likely to get wiped out. The shares traded at $115 on March 8, right before Silicon Valley Bank failed.
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