Bank / Credit Union

First Republic Bank saw $100B in withdrawals

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April 25, 2023

First Republic Bank saw a large increase in withdraws, as customers pulled out more than $100 billion from their accounts in the first three months of 2023 due to concerns about the banking system. As a result, the bank's overall deposits have fallen by 40% since December 2022, according to a report by the BBC.

This event followed the collapse of Silicon Valley Bank last month, which saw customers rushing to pull out their funds when the bank announced it needed to raise $2.25 billion for its balance sheet. Afterwards, Signature Bank was also seized by regulators, an action that prompted another rush of withdraws.

In Europe, Credit Suisse was acquired by its rival UBS, following an announcement that it had lost $69 billion in deposits in the first three months of 2023

"With the closure of several banks in March, we experienced unprecedented deposit outflow," Neal Holland, CFO, First Republic, told the BBC. "We are working to restructure our balance sheet and reduce our expenses and short-term borrowings."

The bank plans to cut 20% to 25% of its workforce to cut costs. Following that announcement, the bank's shares fell by more than 20%. Last month, a group of big banks sent $30 billion to First Republic.

Central banks, meanwhile are largely still increasing interest rates as part of an effort to combat inflation. This hurts the values of bonds, which were purchased by banks during lower periods of lower interest rates.