In the first three months of the year, customers of the First Republic Bank in the United States withdrew over $100 billion from their accounts, citing apprehensions regarding the stability of the worldwide banking system. This has resulted in a decline of the bank’s deposits by more than 40% since December 2022, according to a report by the BBC.
This happened after Credit Suisse, a major Swiss bank, disclosed the extent of the bank run. As a consequence, the bank had to resort to its state-backed rescue.
First Republic has announced its plans to reduce costs by eliminating 20-25% of its workforce in the upcoming months, according to the BBC report.
This impacted the bank’s after-hours trading in New York, as the bank shares fell by more than 20%.
“With the closure of several banks in March, we experienced unprecedented deposit outflows,” First Republic's chief financial officer, Neal Holland, said.
“We are working to restructure our balance sheet and reduce our expenses and short-term borrowings,” he added.
Last month, a group of significant banks in the United States infused $30 billion into First Republic. This was done because the bank was deemed to be in danger of collapsing.
The occurrence of numerous bank failures has led to concerns of a potential crisis in the industry.
Issues in the US banking industry came to light last month when Silicon Valley Bank, which was the 16th largest lender in the country, failed. This was the most significant failure of a US bank since 2008, BBC reported.
Shortly after, Signature Bank in New York also failed.
As per the BBC, Credit Suisse, a significant banking institution in Europe, announced on Monday that it had experienced a withdrawal of $69 billion from the bank during the first three months of the year.
To prevent additional runs on bank deposits, authorities intervened and ensured that deposits were safeguarded beyond the usual limits.
