US federal regulators are scrambling to find a buyer for First Republic Bank as its shares continue to plummet.
The Federal Deposit Insurance Corporation (FDIC) has asked several large banks such as JPMorgan, PNC, US Bancorp and Bank of America to submit bids by April 30, Bloomberg reported.
Spokespeople for the four banks and the FDIC declined to comment. Bloomberg reported that Bank of America is considering whether to make a formal offer. Citizens Bank is also bidding, Reuters reported.
The FDIC contacted the banks on April 27, a day after the bank’s stock plunged 50% following revelations that customers had withdrawn $100 billion in deposits, or 40% of its total, in the first three months of the year. The bank’s stock is now down 97% year-to-date.
San Francisco-based First Republic is seen as the regional bank most vulnerable to the sudden collapse of the Silicon Valley bank. Photo: WA Today
A deal is expected to be announced on the evening of April 30, before Asian markets open. If First Republic is taken over by another bank, it would be the third US bank to fail since March.
In the opposite situation, the FDIC would take over the bank and provide a government bailout for all deposits. This is what the FDIC did with Silicon Valley Bank (SVB) and Signature Bank.
First Republic typically caters to high-end corporate and corporate clients. Its businesses include asset management and residential real estate lending.
First Republic reported more than $212 billion in assets at the end of December 2022 and generated more than $1.6 billion in net income in 2022. The bank was still doing well in early 2023, but was hit hard by the bankruptcy of Silicon Valley Bank and Signature Bank. As of the afternoon of April 28, the bank was worth just $650 million.
On March 16, 11 of America's leading banks together pumped in $30 billion to rescue First Republic from the brink of bankruptcy, but the effort appears to have been in vain, in part because many customers are scared by the prospect of suffering large losses .
Nguyen Tuyet (According to NY Post, Bloomberg)
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