First Republic Shows How Not to Bolster Confidence

When a company in a tight spot wants to reassure shareholders and lenders, one really good way of doing exactly the opposite is to refuse to take questions on an earnings call. First Republic Bank’s executives did just that on Monday evening. The effect on its share price was predictably horrible.

Owners of the $20 billion of uninsured deposits still at the bank are likely to be incredibly nervous, if not already moving. The 11 big banks that loaned First Republic $30 billion in the form of unsecured term deposits last month will equally be watching this slow motion implosion with gritted teeth. Goldman Sachs Group Inc. seemed to signal wariness over its $2.5 billion share of those loans in its first-quarter results when it said it had booked a loss provision on a term deposit.