A Tale of Two Markets

A Tale of Two Markets

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  • First Republic Bank (FRC) took a nosedive after S&P Global slashed its credit score for the second time in a week, missing out on a stellar comeback by its regional banking rivals spearheaded by New York Community Bancorp (NYCB). The bank's shares tumbled as much as 22%, intensifying a recent collapse that had pushed First Republic's stock price down more than 80% in two weeks. 
  • On the other hand, NYCB skyrocketed by a record 40% after taking over Signature Bank's deposits and some of its loans. S&P gave First Republic a less-than-stellar review, downgrading the lender's long-term issuer credit rating to B+ from BB+. Despite a recent $30 billion cash injection from some of Wall Street's giant banks, S&P still believes the bank's future prospects are looking a little "junky".

Why it matters

Investors around the globe are keeping a keen eye out for potential problems in the aftermath of the US Silicon Valley Bank's downfall and the bailout of First Republic. These events have caused concern that deposits may be withdrawn from local banks, resulting in a decrease in liquidity and possibly leading to a credit crunch.


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