United States: First Republic Bank plunges 49% on Wall Street

The Wall Street Stock Exchange, New York (illustration images). AP - John Minchillo

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The banking sector is again struggling on Wall Street on Tuesday, April 25. From Bank of America to JP Morgan to Citigroup, major banks have also taken the water, losing between 2% and 3%. Some regional banks have fallen even more heavily. The area was contaminated by First Republic Bank's plunge. The share of the Californian bank, 14th bank in the United States in March, lost 49% of its value on the New York Stock Exchange, due to poor results announced the previous evening.

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This is a legacy of the panic that swept through the banking sector in March. Investors punish the melting of First Republic deposits in the first quarter, despite a stabilization since the end of March: -41%, or $ 72 billion. And the results could have been even more impressive without the solidarity of other institutions.

After the back-to-back bankruptcy of Silvergate, SVB and Signature, many customers had turned away from regional banks in favour of giants of the sector, considering them more solid. To prevent a wave of panic from dragging everything in its path, several major banks had agreed to inject a total of $ 30 billion into the accounts of First Republic. Without it, its deposits would have shrunk by more than $100 billion.

And it's not just deposits that are decreasing, its net profit has fallen by a third. To turn things around, First Republic intends to limit lending while increasing insured deposits. The Californian bank also intends to strengthen its financial health by reducing its workforce by 20 to 25% and lowering executive compensation.

>> READ ALSO: United States: after a plunge in the stock market, the fate of the bank First Republic in suspense

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