Washington: Following a collapse the previous day, First Republic Bank's stock fell another 30% on Wednesday after the struggling US lender disclosed that depositors had taken out more than $100 billion in the first three months of the year.
On Tuesday, the bank's stock fell 49% after the San Francisco-based lender revealed that it had lost 40% of its deposits, escalating concerns about additional bank failures in the US.
The US banking industry is currently experiencing its worst confidence crisis since the 2007–2008 financial crash as a result of the failures of Silicon Valley Bank and Signature Bank in March.
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Will Denyer, the head US economist at Gavekal Research, stated that "investors got a sharp reminder on Tuesday that the US banking crisis and wider credit crunch are not over."
Media reports state that First Republic is thinking about "strategic options" to raise money and evade being taken over by US authorities. A source with knowledge of the situation told Yahoo Finance that a bailout plan would need support from the US government.
"There is an open bank path solution here," he said. However, the government must convene to bring all the parties together in order for it to be implemented.
The sale of unprofitable assets and the termination of up to a quarter of the lender's approximately 7,200 employees are both reportedly part of the recovery plan.
As an independent lender or possibly as a component of a larger bank, First Republic's future has come under scrutiny in recent media reports.
Any prospective buyer of First Republic would have to take a significant write-down in the value of the lender's assets, according to Christopher Wolfe, head of North American banks at Fitch Ratings.
According to Wolfe, who spoke to Reuters, "the options are very difficult and probably very expensive, especially for shareholders." "Who will cover the expense?"
CNBC reports that the troubled lender's advisors will attempt to convince some of the 11 banks that last month provided a $30 billion rescue package to purchase First Republic's underwater bonds at above-market rates at a loss of several billion dollars.