First Republic Bank, the San Francisco-based lender that was cut to junk by S&P Global Ratings and Fitch Ratings on Wednesday, is exploring strategic options including a sale, according to people with knowledge of the matter.
The bank, which is also weighing options for shoring up liquidity, is expected to draw interest from larger rivals, said some of the people, all of whom requested anonymity discussing confidential information. No decision has been reached and the bank could still choose to remain independent, they said. A spokesperson for First Republic Bank declined to comment.
First Republic said Sunday that it had more than $70 billion in unused liquidity to fund operations from agreements that included the Federal Reserve and JPMorgan Chase & Co. Still, its stock fell 21% Wednesday in New York trading to a decade-low of $31.16, giving it a market value of $5.8 billion.
“The additional borrowing capacity from the Federal Reserve, continued access to funding through the Federal Home Loan Bank, and ability to access additional financing through JPMorgan Chase & Co. increases, diversifies, and further strengthens First Republic’s existing liquidity profile,” the bank said in Sunday’s statement.
The lender specializes in private banking and wealth management, and has made an effort to differentiate itself from Silicon Valley Bank, which has been seized by US regulators. Unlike SVB, which counted startups and venture firms among its biggest clients, First Republic said that no sector represents more than 9% of total business deposits.
