PanamaTimes

Friday, Jul 26, 2024

FDIC prepares to place First Republic under receivership

FDIC prepares to place First Republic under receivership

The U.S. Federal Deposit Insurance Corporation (FDIC) is preparing to place First Republic Bank (FRC.N) under receivership imminently, a person familiar with the matter said on Friday, sending shares of the lender down nearly 50% in extended trading.

The U.S. banking regulator decided the troubled regional lender's position has deteriorated and there is no more time to pursue a rescue through the private sector, the source told Reuters, requesting anonymity because the matter is confidential.

U.S. officials have coordinated urgent talks to rescue the lender in recent days as private-sector efforts led by the bank's advisers have yet to reach a deal, according to three sources familiar with the situation.

The FDIC, Treasury Department and Federal Reserve are among government bodies that have orchestrated meetings with financial companies about putting together a solution for the troubled lender, two of the sources said.

The FDIC asked banks including JPMorgan Chase & Co (JPM.N) and PNC Financial Services Group (PNC.N) to submit final bids for First Republic Bank by Sunday, Bloomberg News reported on Saturday.

The banking regulator reached out to banks late Thursday seeking indications of interest, including a proposed price and estimated cost to the agency's deposit insurance fund, the report said.

The FDIC said in an email: "We would not comment on or confirm whether we are bidding an open institution," in response to a request for comment.

PNC Financial declined to comment on the Bloomberg report. JPMorgan did not immediately respond to a voicemail and email seeking comment.

Separately, the Wall Street Journal reported on Friday that JPMorgan and PNC are vying to buy First Republic following its seizure by the government, which could come as soon as this weekend.

If the San Francisco-based lender falls into receivership, it would be the third U.S. bank to collapse since March. First Republic said this week its deposits had slumped by more than $100 billion in the first quarter.

Shares of the bank closed down 43%, worsening a stock rout that has wiped out 75% of its value this week. The stock lost more than half of its value on Friday and touched a record low of $2.99.


At its lowest, the bank had a market capitalization of nearly $557 million, a far cry from its peak valuation of more than $40 billion in November 2021.

Shares of some other regional banks also fell, with PacWest Bancorp (PACW.O) down 2% after the bell while Western Alliance (WAL.N) was down 0.7%.

News of the imminent move to put First Republic in receivership came the same day the Federal Reserve and FDIC detailed their supervisory lapses before deposit runs caused the collapse of Silicon Valley Bank and Signature Bank in March.

The Fed's assessment of its inadequacies in identifying problems and pushing for fixes at Santa Clara, California-based SVB came with promises for tougher supervision and stricter rules for banks.

Large banks had orchestrated an earlier lifeline for First Republic, injecting into the bank $30 billion in combined deposits from U.S. banking heavyweights, including Bank of America Corp. (BAC.N), Citigroup Inc. (C.N), JPMorgan and Wells Fargo & Co (WFC.N).

But First Republic struggled to find support from larger banks or private equity firms on its proposed move to create a so called "bad bank" or sell assets such as securities and its mortgage book.

The large banks who placed the deposits either declined to comment or were not available to comment.

First Republic, which reported its first-quarter earnings on Monday, had said it plans to shrink its balance sheet and slash expenses by cutting executive compensation, paring back office space and laying off 20% to 25% of employees in the second quarter.

John Guarnera, senior corporate analyst at RBC BlueBay Asset Management, said the First Republic case is an "evolving situation."

"The rest of the regional bank system feels like it's in a different place than where FRC is," he said.

Newsletter

Related Articles

PanamaTimes
0:00
0:00
Close
Mexican Drug Lords El Mayo and El Chapo's Son Arrested in Texas
World's Hottest Day Recorded on July 21
Joe Biden Withdraws from 2024 US Presidential Race
A Week of Turmoil: Key Moments in US Politics
Global IT Outage Sparks Major Concerns
Global IT Outage Unveils Digital Vulnerabilities
Secret Service Criticized for Lack of Sniper Protection During Trump Shooting
Colombian Court Annuls Amazon Tribes’ Carbon Credit Deal
Sunita Williams Safe on ISS, to Address Earth on July 10
Biden Affirms Commitment To Presidential Race
Boeing Pleads Guilty Over 737 MAX Crashes
Beryl Storm Hits Texas, Killing 2 and Causing Major Power Outages
2024 Predicted to Be World's Hottest Year
Macron Faces New Political Challenges Despite Election Relief
Florida Man Arrested Over Attempt to Withdraw One Cent
Anger mounts at Biden’s top team after disastrous debate
Bolivian President Luis Arce Denies 'Self-Coup' Allegations
Steve Bannon Begins 4-Month Prison Sentence
Biden Warns of 'Dangerous Precedent' After Supreme Court Immunity Ruling in Trump Case
Elon Musk Accuses Kamala Harris of Misleading Post on Trump's Abortion Stance
Hunter Biden Sues Fox News Over 'Revenge Porn' Allegations
New York Times Editorial Board Urges Biden to Exit Presidential Race
US Supreme Court Overturns Obstruction Charges Against January 6 Rioters
US Voters Prefer Biden's Democracy Approach, Trump's Economy Plan: Report
Attempted Coup in Bolivia: President Urges Public Mobilization
Top-Secret US Underwater Drone 'Manta Ray' Revealed on Google Maps
United States Bans Kaspersky Antivirus
Inside El Salvador’s 40,000 Inmate Mega-Prison
Toyota, Mazda, Honda, and Suzuki have committed fraud; falsified safety test results
El Salvador's Bitcoin Holdings Reach $350 Million
Teens Forming Friendships with AI Chatbots
WhatsApp Rolls Out Major Redesign
Neuralink's First Brain Implant Experiences Issue
Apple Unveils New iPad Pro with M4 Chip, Misleading AI Claims
OpenAI to Announce Google Search Competitor
Apple Apologizes for Controversial iPad Pro Ad Featuring Instrument Destruction
German politician of the AFD party, Marie-Thérèse Kaiser was just convicted & fined $6,000+
Changpeng Zhao Sentenced to Four Months in Jail
Biden Administration to Relax Marijuana Regulations
101-Year-Old Woman Mistaken for a Baby by American Airlines: Comical Mix-Up during Flight Check-in
King Charles and Camilla enjoying the Inuit voice singing performance in Canada.
New Study: Vaping May Lower Fertility in Women Trying to Get Pregnant
U.S. DOJ Seeks Three-Year Sentence for Binance Founder Changpeng Zhao
Headlines - Thursday, 23 April 2024
Illinois Woman Wins $45M Lawsuit Against Johnson & Johnson and Kenvue for Mesothelioma Linked to Baby Powder
Panama's lates news for Friday, April 19
Creative menu of a Pizza restaurant..
You can be a very successful player, but a player with character is another level!
Experience the Future of Dining: My Visit to an AI-Powered Burger Joint
Stabbing rampage terror attack in Sydney, at least four people killed, early reports that a baby was among those stabbed.
×