First Republic Shares Drop 70% as Regional Bank Worry Spreads

First Republic Bank's (FRC) shares sank as much as 70% on Monday as concern spread about the fate of regional lenders in the wake of Silicon Valley Bank's failure, even as FRC insisted its capital and liquidity were "very strong" and regulators rolled out measures designed to stabilize the financial industry.

First Republic said it had access to additional capital from the Fed and JPMorgan Chase & Co. (JPM), pointing to "total available, unused liquidity to fund operations" of "more than $70 billion." President Biden, speaking from the Roosevelt Room at the White House, said the U.S. banking system was safe and called for "full" accountability after the collapse of Silicon Valley Bank (SIVB) and Signature Bank (SBNY).

Still, regional lenders Western Alliance Bancorp (WAL) plunged 82% and PacWest Bancorp (PACW) tumbled by more than half before trading was halted. Even Charles Schwab (SCHW) trading was suspended on volatility concern after it dropped by almost a fifth. Hedge fund billionaire Bill Ackman tweeted on Sunday that he expected more failures.

"Had the @FDICgov @USTreasury and @federalreserve not intervened today, we would have had a 1930s bank run continuing first thing Monday causing enormous economic damage and hardship to millions," he wrote. "More banks will likely fail despite the intervention, but we now have a clear roadmap for how the gov’t will manage them."

Isaac Boltansky, director of policy research at BTIG, told CNN the measures announced were "not a permanent solution" and it "will not be the final chapter in this story”.

Contagion has been spreading among regional banks after a bank run on SVB on Thursday led to the company's collapse the next day. SVB suffered a surge in customer withdrawals after announcing a share sale to bridge $1.8 billion gap in its balance sheet caused by losses on U.S. treasury holdings. According to FDIC, banks are sitting on $620 billion in unrealized losses on security deposits.