In response to the “unprecedented” outflow of deposits, the company, other than layoffs, is also weighing unspecified strategic options as it works to reinforce its dominant position in the United States.
Between the end of March and April 21, deposits slipped just 1.7 per cent. This, the company said, means that the customer activity has largely been stable.
“Though we faced challenges and uncertainties with the stabilization of our deposit base and the strength of our credit quality and capital position, we continue to take steps to strengthen our business,” Chief Executive Officer Mike Roffler is reported to have said on a conference call.
The company has retained 90 per cent of its wealth professionals and remains “fully committed” to the business, Roffler added.
The company said that the uninsured deposits would remain a smaller part of its total deposit base. It also plans to moderate loan volumes and will now focus on originating loans that can be sold on the secondary market.
“We intend to retain servicing on these loans as we always have so that we remain the primary point of contact for our clients,” Roffler said on the call. “Through these actions we intend to reduce the size of our balance sheet, reduce our reliance on short-term borrowings and address the challenges we continue to face.”
First Republic shares fell 12 per cent in late New York trading.
What is happening at the First Republic Bank?
Last month, the United States government took the “receivership” of the collapsed Silicon Valley Bank, after a sale of available-for-sale securities stokes a massive outflow of the depositors.
The crisis put a spotlight on banks sitting on large piles of unrealised and often unreported losses on their balance sheets, First Republic Bank one amongst them.
ALSO WATCH | Regulators help First Republic Bank get a $30 billion bailout
Bloomberg reported that the First Bank executives considered a sale of the entire bank. The large unrealised losses have caused some buyers to not consider a buyout of the bank at all, the report added.
Founded in 1985, First Republic has expanded its wealth-management services and related offerings for the ultra-rich over the decades.
But in recent weeks, a number of its advisers have left for the rivals, Bloomberg reported.
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