Report: First Republic Considers Sale After Downgrade

First Republic Bank is reportedly considering a sale after being downgraded by ratings agencies.

The lender is also looking at options for boosting its liquidity, Bloomberg News reported late Wednesday (March 15), citing sources familiar with the matter.

It’s the latest sign of upheaval in the banking sector that the federal government has sought to quell, with Treasury Secretary Janet Yellen due to testify Thursday (March 16) that the American banking system remains on solid foundation.

PYMNTS has reached out to First Republic for comment but has not yet received a reply. The San Francisco-based bank was downgraded earlier this week by Fitch Ratings and S&P Global Ratings amid the ongoing turmoil in the banking sector.

“The bank’s business position will suffer after the volatile swings in its stock price and heightened media attention surrounding deposit volatility,” wrote S&P analysts Nicholas Wetzel and Rian Pressman. “Its business stability has weakened as market perceptions of its creditworthiness have declined.”

That volatility began last week when California’s Silicon Valley Bank (SVB) was taken over Friday (March 10) by regulators following a run on deposits. On Sunday (March 12), another lender, Signature Bank, folded as well.

Sunday was also the day First Republic announced that it had gotten access to additional liquidity from JPMorgan Chase and the Federal Reserve Bank and that its capital and liquidity were still “very strong,” PYMNTS reported.

Along with its existing access to funding from the Federal Home Loan Bank, this brought its total unused liquidity to $70 billion, according to a news release from the bank.

First Republic is weighing its options amid increasingly louder calls for tighter banking regulations for mid-sized banks following the collapse of SVB, Signature Bank and a third bank, Silvergate, which announced its liquidation just ahead of SVB’s troubles.

In addition to the push for tighter regulations, there are also investigations underway by the Department of Justice by the DOJ and SEC, though, as noted here Wednesday, it is impossible to tell whether these probes will discover anything meaningful.

Meanwhile, Yellen’s testimony before the Senate Finance Committee Thursday will seek to reassure Americans that they can trust in their banks while also defending the Biden administration’s response to the crisis.

“The government took decisive and forceful actions to strengthen public confidence in our banking system,” the secretary’s prepared remarks say, per a Financial Times report. “On Monday morning, customers were able to access all of the money in their deposit accounts so they could make payroll and pay the bills.”