Another Bank in Crisis? Reports of First Republic Bank Facing Bank Run, Restricting Withdrawals, Crypto-Friendly Signature Bank Stock Plummets by 22%

After the closure of Silicon Valley Bank, shares of the U.S. regional mid-sized bank First Republic Bank plummeted, triggering a run on the bank. Rumors of restricted withdrawals have surfaced, with the FDIC standing by for potential intervention.

First Republic Bank's stock FRC has dropped nearly 15% in after-hours trading, causing panic that has spread to other banks, with PacWest Bancorp falling by 37.9% and crypto-friendly bank Signature Bank dropping by 22.8%.

Bank Run at First Republic Bank

According to information from the Daily Mail, many Californians are lining up outside the California branch of First Republic Bank to withdraw money:

Restrictions on Withdrawals, FDIC Intervention Imminent

Investor Mike Alfred @mikealfred claimed on Twitter that the FDIC is monitoring First Republic Bank and discussing how to protect depositors. He stated that First Republic Bank has halted withdrawals today.

Alfred explained that the bank's business model was based on a gentlemen’s agreement, where users would deposit 30% of the value of their loans into a First Republic Bank account. Despite a 0% interest rate, they could obtain large real estate loans at below-market rates. With the Federal Reserve raising rates, the cost of borrowing has increased, making it less appealing to hold these deposits at zero interest. First Republic Bank has no legal obligations and can prevent users from withdrawing their deposits in a short period.

Due to the successive bank failures, many investors and venture capital funds have requested government intervention.