First Republic Bank’s stock rose 2% Wednesday ahead of the Federal Reserve’s policy meeting and decision on interest rates, and as investors wait for further developments on support for the bank.
The Wall Street Journal reported late Tuesday that First Republic
FRC,
had tapped Lazard to help it review its options, and consultant McKinsey for post-crisis planning, citing people familiar with the matter.
Options on the table include a sale, a capital infusion and asset sales, the sources said, according to the Journal.
The outcome of today’s Fed meeting is unclear following the events in the banking sector of the past 10 days, which have seen the failure of Silicon Valley Bank amid a run on the bank’s deposits, along with the failures of two crypto-friendly lenders, Signature Bank and Silvergate Capital.
Adding to the tension is the forced shotgun wedding of Credit Suisse and UBS in Switzerland last weekend.
At the moment, the market probabilities are 73% for a quarter-percentage-point rise in the Fed’s policy interest rate and 27% for no move, according to the CME FedWatch tool.
First Republic’s stock rallied on Tuesday on reports JPMorgan Chase
JPM,
was helping to bolster its capital. It then tumbled about 9% in the after-hours session.
Reuters reported First Republic is studying a potential sale of part of the bank or a downsizing of operations, to generate cash and contain costs.
The bank is exploring ways to address its unrealized losses on some assets, with Bloomberg News reporting that U.S. officials are working to overcome the issue.
Currently, First Republic has a negative book value, which is difference between its assets and its liabilities.
Across the sector, bank stocks were flat-to-down with the KBW Nasdaq Bank Index
BKX,
off by 0.3% and the Financial Select SPDR Fund
XLF,
trading little-changed.
PacWest Bancorp.
PACW,
fell 2.7% after it said its total deposits fell to $27.1 billion as of Monday, down from $33.9 billion on Dec. 31. PacWest also said it held $11.4 billion in available cash, ahead of its total estimated uninsured deposits of $9.5 billion as of Monday.
The said it’s “encouraged by the stability we have seen in our deposits and liquidity over the past week.”
It also borrowed $3.7 billion from the Federal Home Loan Bank, $10.5 billion from the Federal Reserve Discount Window, and $2.1 billion from the Fed’s new Bank Term Funding Program.
It also drew in $1.4 billion from Atlas SP Partners through a senior asset-backed financing facility.
PacWest said its venture banking business opened 130 new accounts opened since March 9.
