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First Republic Bank: More than $100bn of withdrawals this year First Republic: Shares fall after more than $100bn of withdrawals
(about 20 hours later)
First Republic Bank customers pulled more than $100bn (£80bn) from their accounts in the first three months of the year amid concerns about the health of the global banking system. Shares in First Republic have tumbled nearly 50% as investors question its future.
The US bank says its deposits fell by over 40% since the end of December. The falls came a day after the mid-size US bank said customers had pulled more than $100bn (£80bn) from their accounts amid last month's banking panic.
It comes after Swiss banking giant Credit Suisse yesterday revealed the scale of the bank run that triggered its state-backed rescue last month. First Republic had been seen as one of the banks most at risk of failure, after a series of bank collapses raised fears of a crisis in the sector.
A series of bank collapses have raised fears of a crisis in the sector. It was stabilised by a multi-billion dollar rescue deal.
"With the closure of several banks in March, we experienced unprecedented deposit outflows," First Republic's chief financial officer, Neal Holland, said. The firm's update provided a glimpse of how quickly the concerns spread.
"We are working to restructure our balance sheet and reduce our expenses and short-term borrowings," he added. The bank said it lost roughly 40% of its deposits in the days following those collapses, as customers rushed to withdraw funds.
First Republic also said it planned to cut costs by shedding 20% to 25% of its workforce in the coming months. It ended March with roughly $104bn in deposits, including $30bn it received from other banks in a rescue plan aimed at shoring up confidence.
Shares in the bank fell by more than 20% in extended trading in New York after it made the announcement. First Republic said the situation had since stabilised.
Last month, a group of major US banks injected $30bn into First Republic, which had been seen as at risk of failure. It added that it was pursuing "strategic options" to strengthen its position, including cutting costs by shedding 20% to 25% of its workforce in the coming months.
US regulators called the move "most welcome" while the banks, led by JP Morgan and Citigroup, said the action reflected their "confidence".
Is this a banking crisis - how worried should I be?Is this a banking crisis - how worried should I be?
Warning that US banks face more painWarning that US banks face more pain
Problems in the banking sector surfaced in the US earlier last month when Silicon Valley Bank, which was the country's 16th-largest lender, collapsed in the biggest failure of a US bank since 2008.Problems in the banking sector surfaced in the US earlier last month when Silicon Valley Bank, which was the country's 16th-largest lender, collapsed in the biggest failure of a US bank since 2008.
That was followed two days later by the failure of New York's Signature Bank.That was followed two days later by the failure of New York's Signature Bank.
Authorities stepped in to guarantee deposits beyond typical limits in an effort to head off further runs on bank deposits.Authorities stepped in to guarantee deposits beyond typical limits in an effort to head off further runs on bank deposits.
On Monday, European banking giant Credit Suisse said 61.2bn Swiss francs ($69bn; £55.2bn) had left the bank in the first three months of the year. But that did not immediately prevent concerns from spreading. In Europe, Swiss officials also brokered a rescue for troubled banking giant Credit Suisse, which saw 61.2bn Swiss francs ($69bn; £55.2bn) leave the bank in the first three months of the year.
The announcement came in what were expected to be its last financial results, ahead of the completion of its forced sale to rival UBS.
Central banks around the world - including the US Federal Reserve and the Bank of England - have sharply increased interest rates as they try to curb inflation.Central banks around the world - including the US Federal Reserve and the Bank of England - have sharply increased interest rates as they try to curb inflation.
The moves have hurt the values of the large portfolios of bonds bought by banks when rates were lower.The moves have hurt the values of the large portfolios of bonds bought by banks when rates were lower.
This contributed to the collapse of Silicon Valley Bank, and has raised questions about the situation at other firms. Customers worried about the financial implications for Silicon Valley Bank abruptly pulled funds from their accounts, leading to its collapse. The episode also raised fears about the situation at other firms.
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