Shares in the San Francisco-based bank fell in after-hours trading Tuesday, and fell by 3.6% before the opening of trading on Wednesday, in a sign that the fluctuations that befell the bank may not end. Shares closed up 30% on Tuesday, but have lost nearly 90% of their value since the start of the month.
The bank has appointed advisers Lazard (stock symbol: LAZ), McKinsey & Co. As he explores options including selling or reducing assets, according to a person familiar with the matter Barron. The Wall Street Journal earlier reported news of Lazard’s involvement.
Bloomberg reported late Tuesday that Wall Street CEOs and US officials are exploring the possibility of government support to secure a deal to support the First Republic.
In Europe, UBS offered to buy back the 2.75 billion euros ($2.97 billion) worth of bonds it issued less than a week ago in light of its takeover of longtime rival Credit Suisse.
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The Swiss bank said in a statement that it was offering to buy back the debt “as a result of a judicious assessment of these recent developments and UBS’ long-term commitment to its credit investors.”
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UBS stock has rebounded more than 12% since before the Credit Suisse deal, and is now close to the level it was trading at before the Silicon Valley bank collapse earlier this month. After shares fell nearly 20% early Monday, investors may have begun to rate the takeover as a good thing for UBS.
First Republic stock also resisted on Tuesday, up about 30% in regular trading hours after a report in the Journal that JPMorgan Chase (JPM) CEO Jamie Dimon was leading rescue talks. However, shares have remained close to 90% down since the beginning of March.
Comments from Treasury Secretary Janet Yellen also appeared to help ease concerns, as she said “the situation is stabilizing” at a banking conference. She also said the government could step in to protect depositors at other banks – as it has done with Silicon Valley Bank and Signature Bank – if regulators see a risk of a banking system run.
Other regional bank stocks got a much-needed boost on Tuesday after a prolonged period of pressure. PacWest Bancorp (PACW) stock rose 19%, Western Alliance stock rose 15% and KeyCorp (KEY) closed up 9%. The KBW US Bank Index rose 5% – its best daily performance this year.
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With bank stocks still recovering, investors will be watching the Fed closely later on Wednesday as it reveals its next move on interest rates after a two-day policy committee meeting. Forecasts have fluctuated wildly over the past 10 days or so, but interest rate futures are now indicating that traders expect a quarter percentage point increase, according to CME FedWatch.
“There will be a lot of focus on whether the Fed [will] But equally important will be how they view the current turmoil and whether they still expect more rate hikes after today, Deutsche Bank analysts said early Wednesday.
Write to Callum Keown at [email protected]
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