2023-04-24 21:14:00
The American bank, which would have lost more than 100 billion dollars in deposits, plans to reduce its workforce by 20% to 25% in the second quarter.
By Le Figaro with AFP
Published update
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The American bank First Republic Bankunder strong pressure in March after the default of several financial institutions, fell more than 20% on Monday after the close of Wall Street following its announcement of a melting of 41% of its deposits between the end of 2022 and the end of March 2023 To strengthen its financial health, First Republic is planning major cost-cutting measures, including reducing its workforce by 20% to 25% in the second quarter.
The establishment had already been rolled on Wall Street in mid-March after the liquidation of the small bank Silvergate, quickly followed by the bankruptcies of Silicon Valley Bank (SVB) and Signature Bank. To avoid a contagion of panic, eleven major American banks had agreed to act in concert and deposited a total of 30 billion dollars in deposits in the accounts of First Republic. Despite the measures taken by the authorities and competing institutions to reassure, many customers had chosen to put money in larger banks, deemed too big for the authorities to allow them to fail.
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Including this lifeline, deposits fell by $72 billion in the first quarter, or 41%, to $104 billion at the end of March – without this contribution, the bank lost $102 billion in deposits over the period. Deposits have stabilized since the beginning of the month, falling to 102.7 billion on April 21, mainly due to the sums paid by its customers to pay their taxes, due on the 18th. The bank has also retained 97% of customers that it counted in early January, assured during a conference call its general manager Mike Roffler.
Reduce loans granted
To strengthen its balance sheet, First Republic is looking to increase its deposits, reduce the loans it makes and cut expenses, he said. In addition to layoffs, this will require a reduction in executive compensation and a consolidation of offices. The bank is also in the process “to study strategic options to accelerate its progress”said Mike Roffler.
After a short presentation of the bank’s financial situation, the manager did not, however, wish to answer questions from analysts as is customary during the results season. The bank’s turnover fell by 13% in the first quarter, to 1.2 billion dollars, and its net profit by 33% to 269 million.
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