December 10, 2023

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First Republic Bank is exploring options, including selling. The stock went up.

The bank has appointed advisers Lazard (stock symbol: LAZ), McKinsey & Co. As he explores options including selling or reducing assets, according to a person familiar with the matter Barron. The Wall Street Journal earlier reported news of Lazard’s involvement.

Bloomberg reported late Tuesday that Wall Street CEOs and US officials are exploring the possibility of government support to secure a deal to support the First Republic.

Shares in the San Francisco-based bank fell in after-hours trading Tuesday, indicating that the fluctuations that affected the bank may not end. Shares closed up 30% on Tuesday after a report in the newspaper said that JPMorgan Chase CEO Jamie Dimon was leading rescue talks. The stock is still close to 90% down since the beginning of March.

On Wednesday, First Republic stock rose 2.5% after the market opened, outpacing the S&P 500’s 0.3% gain.

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Comments from Treasury Secretary Janet Yellen also appeared to help ease concerns, as she said “the situation is stabilizing” at a banking conference. She also said the government could step in to protect depositors at other banks – as it has done with Silicon Valley Bank and Signature Bank – if regulators see a risk of a banking system run.

In Europe, UBS offered to buy back the 2.75 billion euros ($2.97 billion) worth of bonds it issued less than a week ago in light of its takeover of longtime rival Credit Suisse.

The Swiss bank said in a statement that it was offering to buy back the debt “as a result of a judicious assessment of these recent developments and UBS’ long-term commitment to its credit investors.”

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UBS stock has rebounded more than 12% since before the Credit Suisse deal, and is now close to the level it was trading at before the Silicon Valley bank collapse earlier this month. After shares fell nearly 20% early Monday, investors may have begun to rate the takeover as a good thing for UBS. On Wednesday, UBS Group shares fell 2.3%.

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With bank stocks still recovering, investors will be watching the Fed closely later on Wednesday as it reveals its next move on interest rates after a two-day policy committee meeting. Forecasts have fluctuated wildly over the past 10 days or so, but interest rate futures are now indicating that traders expect a quarter percentage point increase, according to CME FedWatch.

“There will be a lot of focus on whether the Fed [will] But equally important will be how they view the current turmoil and whether they still expect more rate hikes after today, Deutsche Bank analysts said early Wednesday.

Other regional bank stocks also got a much-needed boost on Tuesday after a prolonged period of pressure. PacWest Bancorp (PACW) stock rose 19%, Western Alliance stock rose 15% and KeyCorp (KEY) closed up 9%. The KBW US Bank Index rose 5% – its best daily performance this year.

On Wednesday, shares of PacWest and KeyCorp

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It was in the red in recent trading, down 4.2% and 1.6%, respectively. However, Western Alliance stock jumped another 9% on Wednesday morning.

Write to Callum Keown at [email protected]

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