First Republic shares fall as Yellen says not considering 'blanket insurance' on bank deposits
Recasts lead; adds Yellen quote; updates Dimon meeting with Brainard; adds context on congressional approval
By Tatiana Bautzer and Chris Prentice
NEW YORK, March 22 (Reuters) -A "bull case" scenario for the shares of beleagueredFirst Republic Bank FRC.N as it considersits options became more difficult on Wednesday after Treasury Secretary Janet Yellen said there is no discussion on insurance for all bank deposits without approval from the U.S. Congress.
First Republic, whose shares have lost much of their value since the banking crisis started in the U.S. on March 8, is among banks speaking to peers and investment firms about potential deals in the wake of U.S. regulators' taking over Silicon Valley Bank SIVB.O and Signature Bank SBNY.O following bank runs.
Morgan Stanley analyst Manan Gosalia, in a report earlier this week, set a target price of $54 for First Republic shares in a best-case scenario. The stock on Wednesday closed at $13.33, down 15.5% The optimistic case was based on a scenario in which the Federal Deposit Insurance Corp (FDIC) insures all consumer deposits through the end of the banking crisis, triggering a return of the majority of customer deposits, according to the report.
That hope was reduced on Wednesday, after Yellen tolda hearing of the U.S. Senate's Appropriations Subcommittee on Financial Services that she was not considering such a move without congressional approval and was reviewing bank risks on a case-by-case basis.
"I have not considered or discussed anything having to do with blanket insurance or guarantees of deposits," she said.
On Tuesday, she said the Treasury and regulators had a "resolute commitment" to safeguard deposits of smaller institutions, including community banks.
Her latest remarksaffected all regional bank stocks, said R.J. Grant, head of trading at Keefe, Bruyette & Woods.
"Yellen struck a different tone for sure. There was this feeling that there was behind-the-scenes talks in Washington that depositors would be protected," Grant said.
JPMorgan JPM.N Chief Executive Jamie Dimon met with Lael Brainard, director of the White House's National Economic Council, on Wednesday during aplanned trip to Washington, according to a person familiar with the situation. The meeting agenda was unclear. It cameas First Republic's efforts to secure a capital infusion continued.
The Morgan Stanley report considered that a potential extension of FDIC insurance could bring a majority of First Republic's customers back. Banks involved in First Republic's rescue negotiations are asking for a loss-sharing arrangement with the U.S. government similar to the terms agreed by Switzerland's UBSGroup UBSG.S in its emergency takeover of rival Credit Suisse CSGN.S, according to an industry source.
The acquirer would receive support if after buying First Republic it finds a larger loss than expected, added the source, who requested anonymity to disclose private conversations.
First Republic declined to comment.
The bank is looking at ways it can downsize if attempts to raise new capital fail, Reuters reported on Tuesday, citing three people familiar with the matter.
Even if it clinches a cash infusion, the lender will probably need to take losses on securities in its so-called held-to-maturity portfolio, the Morgan Stanley analysts wrote.
A potential buyer would need to absorb $26.8 billion in mark-to-market losses fromFirst Republic's loan and securities portfolios, while an extra $9.5 billion is needed to recapitalize the bank, the Morgan Stanley analysts estimated.
In the worst-case scenario, First Republic's shares would sink to just $1, Morgan Stanley analysts estimated.
Citigroup withdrew its estimates for First Republic on Tuesday and put the stock under review. Analysts Arren Cyganovich and Kaili Wang said in a report that "some form of government intervention seems increasingly likely, albeit in what form remains unclear."
WRAPUP 4-Fed delivers small rate hike, sees possibility of 'some additional' tighteningnL1N35T1L5
WRAPUP 7-U.S. Fed delivers small rate hike amid global banking turmoil nL1N35U02T
UPDATE 1-US not considering 'blanket insurance' for bank deposits, Yellen saysnL1N35U2FX
Reporting by Tatiana Bautzer and Chris Prentice in New York
Additional reporting by Sinead Carew in New York
Editing by Lananh Nguyen, Nick Zieminski, Matthew Lewis and Leslie Adler
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
