: Fitch downgrades First Republic Bank again on ‘costly’ funding profile

Fitch Ratings late Wednesday downgraded First Republic Bank’s FRC debt rating three notches, following a downgrade last week. Fitch downgraded the bank’s issuer default rating to “B” from “BB.” The downgrade comes after a group of banks injected $30 billion of liquidity into the bank. “While this injection created necessary headroom from a liquidity perspective, the bank’s new funding profile is relatively costly and is viewed as the primary ratings constraint,” Fitch said. “Fitch estimates that, due to the higher cost of funds, FRC is currently operating at a net loss that is not sustainable over the longer term absent a balance sheet restructuring,” the ratings agency said. “Furthermore, to the extent that FRC is required to repay the $30 billion at the end of its term, it will have to raise liquidity by selling assets.”

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