(Reuters) – First Republic Bank’s shares more than halved in premarket trading on Monday as news of fresh financing failed to reassure investors days after SVB Financial Group’s downfall ignited fears of contagion in the banking sector.
First Republic on Sunday said it had secured additional financing through JPMorgan Chase & Co, giving it access to a total of $70 billion in funds through various sources.
The lender also said it had an additional borrowing facility from the U.S. Federal Reserve.
Despite the cash infusion, Raymond James double downgraded the bank’s stock to “market perform” from “strong buy”, highlighting the risk of deposit outflows that First Republic faces from panicked large depositors after the bank run at SVB last week.
The bank’s stock was last down 74% at $21.11 on Monday.
“While the bank (SVB) is better positioned for potential deposit outflows on Sunday evening than it may have been earlier in the weekend, if there are net deposit outflows, it will shrink the EPS power of the bank,” Raymond James analyst David Long wrote in the note.
U.S. authorities launched emergency measures on Sunday to shore up confidence in the banking system after the failure of Silicon Valley Bank threatened to trigger a broader financial crisis.
First Republic’s shares were leading losses among other regional lenders, with Western Alliance down over 26% in trading before the bell.
(This story has been corrected to fix typo in the headline)
(Reporting by Medha Singh in Bengaluru; Editing by Shinjini Ganguli)
