The US Federal Deposit Insurance Corporation (FDIC) is preparing to place First Republic Bank (FRB) under external management in the near future.
Source. Reuters writes about it.
According to the source, the regulator decided that the condition of the troubled bank had deteriorated and "there is no more time to save it" through the private sector.
Several financial corporations, including JPMorgan Chase and PNC Financial Services, are bidding for FRB, the Wall Street Journal reports. According to the publication, the FDIC is going to take over the bank this weekend.
During trading on April 28, the value of FRB shares fell by more than 50%. At its lowest point, the stock was worth $2.98, which was a record drop for the entire time it had been traded on the stock exchange. The shares began to fall sharply after the bank reported a $100 billion deposit outflow and an increase in borrowing. The drop was 75% in one week, and more than 95% since the beginning of the year.
Amid the US banking crisis, First Republic lost more than 90% of its market value. Concerned about the situation, the authorities began discussing options for its rescue, the Financial Times reported.
The FRB itself was unable to find buyers for its business or parts of it, as no one wanted to take such risks. The newspaper's sources called the transfer of the credit organization to the FDIC one of the main options, the other was a rescue by the largest US banks, which have already placed $30 billion in support.
First Republic Bank may become the fourth US bank to fail in two months. Prior to that, Silvergate, Silicon Valley Bank, and Signature Bank closed in March.
As of the end of last month, First Republic was ranked 14th with assets of $212.6 billion. Its collapse could be the largest since the 2008 financial crisis – now the "palm tree" belongs to Silicon Valley Bank, which had assets of $209 billion.
Background. As a reminder, the American First Citizens Bank is buying the bankrupt SVB – the new owner will take over most of the assets of Silicon Valley Bank, which went bankrupt in early March.