Shares of First Republic Bank tumbled as much as 27% in premarket trading Thursday, amid reports it is exploring its strategic options, including a possible sale of the company. The move comes as other bank stocks bounced back to their feet after heavy losses on Wednesday. Bloomberg reported late Wednesday that San Francisco-based First Republic Bank is looking for ways to increase its liquidity and that the bank is likely to attract interest from larger rivals. A spokeswoman for First Republic declined to comment to MarketWatch about the potential sale. First Republic stock fell Thursday after the banking sector got a lift from Credit Suisse CS, -13.94% , which said it would borrow about $54 billion from the Swiss central bank to “pre-emptively strengthen its liquidity.” Also Read: Shares in Credit Suisse said it would borrow from the SNB and buy back debt First Republic’s shares have lost nearly two-thirds of their value in the past week, partly because it serves individuals and clients alike in the Silicon Valley bank universe. Venture capital and private equity firms served by Silicon Valley bank SIVB, -60.41% , which failed last week. Investors then turned to seeing First Republic as the next domino, and its stock fell sharply. Adding to its woes, S&P Global Ratings and Fitch Ratings on Wednesday downgraded First Republic’s debt to junk bond territory, citing concerns about deposit flight to big banks that are supposed to be safe. See more: First Republic Bank has been downgraded to ‘junk’ by S&P and Fitch, and on fears that further deposit flight will hurt profitability, an analyst at JPMorgan said early Thursday that retail traders sold about $88 million of the First Republic single stock ETF last week, up from $163. accounted for most of the Millions of financial ETFs that were dumped by those investors. About $104 million of that came from regional banks. First Republic stock is now down 82% over the past 12 months, while the S&P 500 SPX, -0.70% is down 10.7%. On Sunday, FirstRepublic said it had the Federal Reserve and JPMorgan Chase & Co. JPM, -4.72% strengthened its financial position with “excess liquidity,” giving it more than $70 billion in unused liquidity. Richard Bowe, a banking analyst at Odeon Capital, told MarketWatch on Wednesday that First Republic’s debt downgrades were “quite a shock” for the company because they would increase borrowing costs and raise questions about the health of the business. But the company’s credit line with JPMorgan Chase and caution from federal banking regulators will keep the bank healthy, Bowe said. “Is the company in deep trouble? No,” Bowe said. “I don’t think the US government will let it go.” However, the bank has some weaknesses, such as a large investment in mortgage-backed securities with fixed yields, while the cost of holding its deposits is rising, he said. was Also Read: Shares of regional and major banks are volatile amid growing fears of a banking crisis
