First Republic shares are volatile as capital injections remain in limbo

(Reuters) – Shares of First Republic Bank (FRC.N) were choppy in morning trade on Wednesday as the regional lender struggled to raise capital amid fears it might need to downsize or seek government support.

Major banks and private equity firms have so far refrained from injecting capital, fearing losses in the bank’s loan book and investment portfolio following the rapid rise in interest rates.

Shares of the bank have been swinging between gains and losses and were last up 3.6% at 10:31 a.m. ET. The shares have lost nearly 87% of their value this month so far.

On Tuesday, Reuters reported that First Republic is considering how to downsize and sell off its business, including some of its loan book, in an effort to increase liquidity and reduce costs.

“First Republic is one on the road, but it’s in the eye of the storm,” said Paul Nolte, senior wealth advisor and market strategist at Murphy & Sylvester.

Earlier this month, concerns about the health of the First Republic prompted top power brokers including US Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and JPMorgan (JPM.N) CEO Jamie Dimon to put together an unprecedented $30 bailout. Billion dollar.

US authorities have sought to reassure Americans that the public banking system remains sound and that regulators are committed to ensuring that another regional lender does not collapse in the wake of Silicon Valley Bank (SIVB.O) and Signature Bank (SBNY.O).

“The First Republic has its own unique situation. There are other banks in negotiations right now to take over their deposits or inject more money into the bank, so it’s hard to say now that (the banking crisis) is over,” Nolte added.

Additional reporting by Manya Saini and Amruta Khandekar in Bengaluru; Edited by Sriraj Kalluvila

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