After a report that the regional bank could raise more money, worries about its assets despite a $30 billion rescue last week, the shares of First Republic Bank slumped 16% on Monday, leading losses among U.S. lenders in premarket trading.
S&P Global downgraded the bank to junk status on Sunday, and said the recent cash infusion from 11 large U.S. banks may not solve its liquidity problems.
The banks involved in the unprecedented support also fell. JPMorgan Chase Co, Citigroup Inc., and Bank of America Corp. were down between 0.6% and 1.5%.
After UBS Group secured a state-backed takeover of troubled peer Credit Suisse Group AG, global bank stocks and bonds came under pressure. San Francisco-based First Republic is in talks to raise capital from other banks or private equity firms by issuing new shares and possibly negotiating a deal to be sold, the New York Times reported late on Friday.
On Sunday, Reuters reported that the lender was still trying to put together a capital raise but that no deal was imminent.
The shares of the First Republic have lost 80% of their value over the past seven sessions.
Other regional lenders bucked the trend. PacWest Bankcorp was up 5.9% after the bank said deposit outflows had stabilized and its available cash exceeded total uninsured deposits.
Truist Financial Corp and KeyCorp were flat before the bell.