Federal Regulators Seek Buyer for First Republic Bank as Shares Plummet

Federal regulators are urgently seeking a buyer for First Republic Bank, as its stock continues to plummet in the wake of the bank’s customers withdrawing $100 billion worth of deposits in the first three months of the year. The bank initially suffered a 50% stock price drop on Tuesday after the news was made public, followed by a further 30% drop on Wednesday. The FDIC has reportedly asked several major banks, including JPMorgan Chase & Co., PNC Financial Services Group Inc., US Bancorp and Bank of America Corp. to submit final bids for First Republic Bank by Sunday, after initially gauging their interest earlier in the week.

The FDIC is looking to sell between $50 billion and $100 billion worth of First Republic Bank’s assets, which includes mortgages and securities. In light of the bank’s deteriorating position, the FDIC has reached out to other major public companies for help. Bloomberg reports that the regulator has offered each bank a proposed price and an estimated cost to the agency’s deposit insurance fund. People familiar with the matter say the FDIC has since whittled their choices down to at least half a dozen banks, including Citizens Financial Group Inc.

If a deal is struck, it is expected to be announced on Sunday night before Asian markets open. The regulator is likely to also announce that it had seized First Republic Bank. If no buyer is found, the FDIC could take over the bank and offer a government backstop for all deposits, a course of action it took with Silicon Valley Bank and New York’s Signature Bank.

First Republic Bank was founded in 1985 and is headquartered in San Francisco. It operates 80 offices in 10 states across the US and provides personal banking, business banking, private wealth management, and commercial real estate lending services.

The bank’s customer withdrawals of $100 billion worth of deposits in just three months highlight the significant impact that the COVID-19 pandemic has had on the US economy. Many businesses have been forced to close or operate at reduced capacity, resulting in lost revenue and financial instability.

First Republic Bank’s situation is also indicative of the wider problems facing the US banking industry. As interest rates remain low, banks are finding it increasingly difficult to generate revenue from loans, which is their primary source of income. This has led to many banks struggling to maintain profitability, with some opting to merge with larger institutions in order to survive.

However, some experts believe that the current economic climate presents an opportunity for well-capitalized banks to acquire distressed assets at attractive prices. This could lead to increased consolidation within the industry, with larger banks looking to acquire smaller institutions that are struggling to remain afloat.

In the case of First Republic Bank, it remains to be seen which bank, if any, will step in to acquire its assets. The FDIC’s decision to seek out a buyer is a clear indication of the bank’s dire financial situation, and highlights the challenges facing the US banking industry as a whole. It is clear that these challenges will need to be addressed in order for banks to remain profitable and continue to support the US economy.