Photo: ANP
Credit rating agency S&P Global has become more negative about the financial health of US bank First Republic. According to analysts, the risk of many clients withdrawing their money from the regional bank remains high after the collapse of two other US banks at the end of last week. First Republic now has a BB+ rating, dropping its credit rating several times below the junk loans mark.
This means that lending money to a bank is one of the riskier investments. The delisting follows the collapse of Silicon Valley Bank (SVB) in San Francisco and Signature Bank in New York. Both lenders had to deal with customers who came to claim their credits from the bank en masse.
According to S&P Global, First Republic is riskier than similar banks in the US. This is because the full pool of account holders in this bank is less diverse than their counterparts.
The SVB’s one-sided group of depositors has already led to criticism. This bank mainly attracted clients from the world of technology and startups around San Francisco. But given the less favorable economic outlook, these companies in particular needed more of their assets, resulting in above-average cash flow.
First Republic is the 14th largest bank in the United States by balance sheet size. The Bank of San Francisco has $212 billion in investments and more than $176 billion in deposits.
