On the 17th (local time), international credit rating agency Moody's downgraded the credit rating of First Republic, a small to mid-sized bank in the United States, from 'Baa1' to the non-investment grade 'B2,' a drop of seven levels. Moody's cited deteriorating financial conditions and increased reliance on financial support due to fund withdrawals as reasons for the downgrade.
Standard & Poor's (S&P) also lowered First Republic Bank's credit rating by four levels from 'A-' to the speculative grade 'BB+' on the 15th.
Earlier, on the 10th, the California Department of Financial Protection and Innovation shut down Silicon Valley Bank (SVB), a startup funding source, due to liquidity shortages caused by a bank run. SVB's parent company, Silicon Valley Bank Financial Group, filed for bankruptcy protection with U.S. financial authorities on the 17th, one week after the bank's closure.
The U.S. government, fearing the crisis might spread to smaller banks, took immediate measures to limit damage by guaranteeing all customer deposits in banks regardless of insurance limits.
However, despite government intervention, concerns over the financial soundness of small to mid-sized banks have spread, causing the stock prices of some banks, including First Republic, to experience sharp fluctuations.
On the 17th at the New York Stock Exchange, First Republic closed at $23.03 (30,157 KRW), down 32.8%. Having closed at $115 on the 10th, First Republic's stock price fell 79% over the course of a week.
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