FRC - First Republic's access to Fed facilities likely to be limited if ratings cut - report
2023-04-26 15:21:43 ET
First Republic Bank ( NYSE: FRC ) has yet to reach a private deal to shore up its balance sheet, prompting the Federal Deposit Insurance Corp. to consider cutting the embattled regional lender's ratings, Bloomberg reported Wednesday, citing people with knowledge of the matter.
Should the banking regulator lower its scoring of FRC's condition (including its Camels rating), the lender's access to Federal Reserve lending facilities -- both the discount window and the recently launched emergency facility -- would likely be limited, the people said, adding that the FDIC has not made a decision.
On Tuesday, First Republic ( FRC ) shares sold off hard after its disappointing first-quarter financial results, featuring a sharp drop in deposits and plans to reduce headcount by up to 25%, renewed concerns about the banking sector. The California bank said it had $45.1B in unused borrowing capacity and available cash as of last week. News also broke that the bank is weighing divesting $50B-$100B of assets to bolster its finances.
Just days before the banking turmoil emerged last month, FRC changed hands at around $120 per share, only to plunge to $5.42 at the time of writing as troubles mount. Earlier, CNBC reported FRC's advisors have lined up potential buyers for new stock if it can reduce its balance sheet sufficiently, but that would take hold only if other banks agree to buy underwater bonds from the firm.
Spokespeople for First Republic ( FRC ), FDIC, Fed and Treasury declined to comment, Bloomberg said .
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First Republic's access to Fed facilities likely to be limited if ratings cut - report