First Republic shares hit record low after report says government unwilling to intervene

On Wednesday, First Republic Bank (FRC.N) shares reached a record low after a report suggested the U.S. government was unlikely to help in the rescue process, raising fears about the ailing lender’s turnaround plans.

After falling nearly half on Tuesday, the company’s shares were down 25% at $6.05.

According to CNBC, sources, U.S. officials were unlikely to intervene in the First Republic rescue process.

A source told Reuters on Tuesday that the bank is considering selling assets or creating a “bad bank.”

According to a Wednesday report, First Republic’s advisers have lined up buyers of new stock if they can restore the bank’s balance sheet.

Analysts have identified numerous obstacles that could hinder the San Francisco-based lender’s rescue efforts as it attempts to recover from a first-quarter deposit outflow of more than $100 billion.

“The (First Republic) assets will be sold, but it may take some time and could be sold at a pretty severe discount to par,” said Aptus Capital Advisors portfolio manager David Wagner.

Since First Republic released first-quarter earnings on Monday, three brokerages have lowered their price estimates.

“First Republic’s problems are likely idiosyncratic… and they obviously have a painful path in front of them,” said Boston’s B Riley Wealth chief market strategist Art Hogan.

Last week’s regional bank earnings reports had soothed investors, but First Republic’s results put the banking sector under pressure.