Its title plunged about 20% at mid-session Thursday on the New York Stock Exchange after having already lost 21% the day before and 73% since March 8.

It fell even further at the open after a Bloomberg report claiming that First Republic is currently exploring "strategic options" for its future, including a possible sale.

The stock has regained some ground following reports from the Wall Street Journal that JPMorgan Chase, Morgan Stanley and other major banks are trying to come to First Republic's aid and are discussing various alternatives, including a capital increase.

Contacted by AFP, the bank said it had no comment to make.

First Republic, founded in 1985 and headquartered in San Francisco, is the 14th largest U.S. bank by asset size.

It provides private banking services for individuals and companies and wealth management with offices mainly in California, but also on the East Coast (New York, Massachusetts, Connecticut, Florida), in the states of Oregon, Washington and Wyoming.

In short, it has "a wealthy clientele concentrated in coastal urban areas," Eric Compton, an analyst for Morningstar, described in a note.

Risk of deposit leakage

Led until mid-2021 only by its founder Jim Herbert --who left his place as CEO to Mike Roffler while keeping the position of chairman of the board-- it has recorded "remarkably high organic growth year after year," notes Eric Compton: it went from $ 22 billion in assets at the end of 2010 to $ 212 billion at the end of 2022.

But the profile of its clientele has recently become a weakness after the close failures of Silicon Valley Bank, Signature Bank and Silvergate, banks that had bet on particular sectors of activity, the world of tech for SVB or that of cryptocurrencies for Signature Bank and Silvergate.

According to S&P Global Ratings, 68% of deposits stored at First Republic are in accounts exceeding $ 250,000, the limit usually guaranteed by the authorities.

Even if customers come from diverse economic sectors, some fear that many of them prefer to move their money to larger banks that do not pose a priori risk of default, because they are too large for regulators to let close.

Already closely monitored last weekend, the bank said Sunday that it had "strengthened and diversified its liquidity" and had $ 70 billion at its disposal thanks to the facilities offered by the US central bank and JPMorgan Chase.

Not enough in the eyes of the rating agencies S&P Global Ratings and Fitch, which on Wednesday lowered the rating they give to the company's debt in the category of speculative investments.

"We believe that the risk of deposit flight is high at First Republic Bank despite the measures taken by banking regulators and the fact that the bank is actively increasing its borrowing capacity to mitigate the risk related to last week's bank failures," S&P said in a note.

© 2023 AFP