Shares of First Republic Bank and Credit Suisse fell on Friday, as investors remained wary of the collapse of the banking industry despite government and private measures to stabilize the sector.
Bank stocks’ slide was halted on Thursday when both First Republic and Credit Union received emergency funding guarantees aimed at shoring up their beleaguered finances. Shares of First Republic Bank fell 33% to close at $23.03 on Friday, while Credit Suisse fell 7% to end the day at $2.01.
The drop came after First Republic shares fell on Thursday, while Credit Suisse shares were flat, indicating short-term relief amid deepening worries about the industry following the sudden declines of Silicon Valley Bank and Signature Bank last week.
On Thursday, a consortium of 11 major financial institutions pledged to provide $30 billion First Republic Bank is financing and the Swiss central bank has agreed to provide almost $54 billion to Credit Suisse.
First Republic reported $176 billion in deposits in December, but its recent borrowing from the Federal Reserve may indicate depositors are withdrawing their money faster than previously, one analyst said.
“We think this reinforces fears that other regional banks could see deposit outflows, although we expect much smaller outflows,” CFRA Research analyst Alexander Yocum wrote in a note on Friday.
Meanwhile, efforts by the Swiss National Bank to recapitalize Credit Suisse have not allayed concerns about its finances. The capital injection is unlikely to solve Credit Suisse’s main problem, which is that it has not made a profit for two years, analysts at Capital Economics said.
While Credit Suisse has plans to revive its business over a three-year period, “it’s not clear whether the markets will allow it to take that long,” Andrew Cunningham, chief European economist at Capital Economics, said in an investor note on Friday.
Shares of San Francisco-based First Republic tumbled after California regulators was caught Silicon Valley Bank on March 10. As with Silicon Valley Bank, a significant portion of First Republic’s deposits are uninsured, making it prone to borrowing from sketchy customers. The bank has $212 billion in assets under management and approximately 7,200 employees.
Its share price has lost 81% of its value since the beginning of the month, amid questions about the financial stability of the First Republic.
Meanwhile, Credit Suisse’s troubles began long before the Silicon Valley bank’s collapse. It had a net loss of $8 billion last year, the largest loss the company has ever recorded.
Credit Suisse is a “big threat to the global economy” in part because it has subsidiaries outside Switzerland and trades in hedge funds, Cunningham said.
Shares of other regional banks, including KeyCorp, Pacific West, Western Alliance and Zions, fell between 7% and 11% on Friday, but those banks were not promised billions of dollars in bailouts like Credit Suisse and First Republic.