First Republic Bank’s shares plunge as it reveals more than $100bn of withdrawals
Shares in First Republic Bank have tumbled to a new record low after the troubled US regional lender admitted last month’s banking crisis sparked a customer deposit flight of more than $100bn.
The bank, which was saved from possible collapse by a $30bn cash injection agreed by major lenders, saw its stock drop by up to 29% on Tuesday.
It followed the release of its first quarter earnings report that revealed the extent of the challenge it faced to recover the business.
First Republic said the withdrawals, which amounted to more than half its pre-crisis total, had cooled since the rescue cash was announced but it was yet to recover any meaningful deposits.
Financial market analysts said the amount, which was higher than the market had expected, had revived fears that First Republic could become the third US bank to fail after the collapse of Silicon Valley Bank and Signature Bank.
The crisis of confidence also saw Switzerland’s Credit Suisse, which endured a £55bn deposit outflow, forced to merge with rival UBS.
The saga was largely born out of concerns that rising interest rates imposed by central banks to tackle inflation had damaged their balance sheets.
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March: Will First Republic be next bank to fall?
San Francisco-based First Republic said it would move to shrink its balance sheet.
Bloomberg News reported that the bank was exploring asset sales of up to $100bn.
Executive pay cuts, First Republic said, would be followed by thousands of job losses to be completed by the end of June.
The bank said it expected to axe between 20%-25% of its workforce, which was reported at 7,200 at the end of last year.
Its results statement did little to support shares of other US regional lenders, with some seeing shares down by more than 5%.
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Analysts said the sector, but especially First Republic, had to assure customers that their deposits remained
safe and investors that they had the liquidity to operate effectively.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “It seems the lifeline thrown to First Republic by large lenders hasn’t stopped confidence sinking.
“With almost a quarter of the workforce being axed and a quick-fire asset sale getting underway, investors are sensing panic and fleeing the stock and worries are rising about another banking collapse.”
Business
Energy bills to rise again from January but spring falls to come, research firm Cornwall Insight forecasts
Energy bills are to rise again next year, according to a respected forecaster.
Costs from January to March are projected to rise another 1% to £1,736 a year for the average user, according to research firm Cornwall Insight.
The energy price cap, which sets a limit on how much companies can charge per unit of electricity, is also expected to rise, costing typical households an extra £19 a year.
It’s a further increase after energy costs rose 10% from October.
After the latest hike, there were hopes of a fall in the new year, but volatile wholesale gas and electricity markets are still above historic average costs.
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Prices have gone up due to supply concerns arising from Russia‘s war in Ukraine, and maintenance of Norwegian gas infrastructure.
But spring is expected to herald a reduction as is October 2025, Cornwall Insight said.
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‘Energy prices make me depressed’, pensioner Roy Roots said in August
Every three months energy regulator Ofgem revises the cap based on wholesale costs.
The official January price cap announcement will be made on Friday.
It comes as millions of pensioners lost their automatic winter fuel allowance payment after the government means-tested the benefit.
Meanwhile, Cornwall Insight’s principal consultant Dr Craig Lowrey warned “millions” of households won’t heat their homes to “recommended temperatures, risking serious health consequences” with bills on the rise.
“With it being widely accepted that high prices are here to stay, we need to see action,” he said, suggesting options like cheaper rates for low-income homes, benefit restructuring, or other targeted support for the vulnerable “must be seriously considered”.
The energy price cap system is being reviewed by Ofgem with possible changes to the standing charge coming over the next year.
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The long-lasting solution to high energy bills is the transition to UK-produced renewable power, the firm said.
“While there will be upfront costs, this shift is essential to building a sustainable and secure energy system for the future.”
The owners of Scotland’s only oil refinery have rejected a US-led approach about a possible bid for it months before its scheduled closure.
Sky News has learnt that a consortium said to be led by Robert McKee, an American energy industry veteran, wrote to Petroineos, the owner of the Grangemouth site, to express an interest in buying it.
The approach, which is understood to have been made earlier this month, was rejected by Petroineos, which is 50%-owned by the petrochemicals empire founded by the Manchester United FC shareholder Sir Jim Ratcliffe.
The consortium is understood to comprise The Canal Group, which is reportedly developing a green energy refinery in Texas, and Trading Stack, a Middle East-based commodities trader.
Mr McKee spent nearly four decades with ConocoPhillips, one of the biggest energy companies in the US.
Sources close to the situation said that Petroineos had rebuffed the offer in order to concentrate on a publicly announced plan to transform the century-old plant into a finished fuels import terminal.
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They added that the nature of the consortium’s approach had raised questions about its access to financing and expertise in operating an asset of this kind.
The Grangemouth refinery, which employs about 450 people, loses about £200m annually.
Its other shareholder is the state-backed Chinese energy giant PetroChina.
The site is due to close next year.
A person close to the consortium insisted that its financing was robust and said it would assess the feasibility of building a new refinery elsewhere in the area.
They added that the consortium had had “positive interactions” with trade union officials, and believed that there was scope to rapidly make Grangemouth’s refinery operations profitable.
On Monday, a spokesman for Petroineos said: “Since the Petroineos joint venture was formed 13 years ago, our shareholders have invested nearly £1bn in the refinery, only to absorb losses of £600m.
“Last week, the refinery lost £385,000 on average each day and we expect to lose more than £150m in total during the course of this year.
“We have not received any credible or viable bids for the refinery.”
A spokesman for the consortium declined to comment.
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