Despite an unprecedented outpouring of support for the bank from nearly a dozen of the biggest financial organizations in the world, First Republic Bank’s (FRC.N) shares dropped 17% in extended trading on Thursday.
Earlier this week, 11 Wall Street firms announced they were depositing $30 billion into First Republic in an unusual rescue that several sources claimed was orchestrated by JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon, Treasury Secretary Janet Yellen, and Federal Reserve Chair Jerome Powell.
However, investors’ comfort did not last long. After a wild day that saw trading halted 17 times, the bank’s shares, which had finished 10% higher, plummeted in after-market trading. In the post-market period, there were 15.6 million shares traded.
After First Republic announced in a filing that it was halting its dividend, the decision was reversed. In addition, it stated that after deducting the $30 billion in fresh deposits, it had a cash balance of about $34 billion.
The business also disclosed that between March 10 and March 15, it had borrowed up to $109 billion from the Fed, and on March 9, it had borrowed an extra $10 billion from the Federal Home Loan Bank.
The decline in First Republic’s shares following the rescue agreement with the largest U.S. banks highlights the severity of market jitters that were sparked when two regional banks collapsed. Earlier this week, separate efforts by U.S. and European authorities to reassure investors by implementing emergency measures to support investor confidence in the banking sector failed.