SVB collapse: First Republic Bank’s rating slashed to junk status
FThe value of irst Republic Bank has dropped after Standard and Poors downgraded its rating from junk to junk status on Wednesday. This is amid other concerns about the bank sector following the collapse. Silicon Valley Bank.
The agency’s credit rating moved the long-term issuer of the San Francisco-based bank Credit From A-, rating to BB+ According to the group, Bank There is a greater risk that depositors will withdraw their money even though the government took action to stop a bank run this week.
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“We believe that First Republic’s deposit base is more concentrated than most large U.S. regional banks, which presents heightened funding risks in the current environment,” S&P .
The bank is only one of many regional banks that has fallen prey to the uncertainty and falling stock prices after the collapse of Silicon Valley Bank. First Republic stock fell fast Wednesday morning, despite a turbulent week and the credit downgrade.
Within an hour of the opening bell, shares of the bank fell by 15% as investors fled the stock in fear that First Bank would be next.
On Wednesday, the megabank Credit Suisse in Switzerland was also experiencing a slump. This is because Saudi National Bank’s chairman, which is the largest shareholder of the bank, has announced that it will not be increasing its stake in the bank due to regulatory constraints.
Credit Suisse’s stock dropped more than 24% in the fracas.
Credit Suisse Chairman Axel Lehmann said Wednesday that government assistance is available to him “isn’t a topic.”
“We have strong capital ratios, a strong balance sheet,” Lehmann stated. “We already took the medicine,” He said this in reference to restructuring.
Wall Street is experiencing turmoil after Tuesday’s stocks close. However, investors seemed to be calming down following the failures by SVB (crypto lender Signature Bank) and other financial institutions.
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The Chicago Board Options Exchange Volatility Index was a good indicator of fear returning. It is also known as VIX. “fear index.”
The VIX rose nearly 14% Wednesday morning, indicating more market anxiety.
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