UPDATE (Sunday, April 30, 3:25 p.m.) The Federal Deposit Insurance Corp. has set the bank’s bid for San Francisco-based First Republic Bank, according to multiple reports. For today’s noon deadline.
The FDIC ordered as many as six banks, including JPMorgan Chase & Co, PNC Financial Services Group and Bank of America, to bid for the struggling lender after weighing rates late last week, Bloomberg first reportedciting sources close to the matter.
The FDIC contacted banks on Thursday to assess interest rates, including the possible price and cost of the regulator’s deposit insurance fund, in an effort to avoid a takeover, the outlet reported. Auction results are expected tonight, Bloomberg News.
On Monday it was reported that the client had $102 billion withdrawn since last monthas it struggles to hold low-rate fixed-rate mortgages.
First Republic is primarily in the business of making loans to homeowners, and in large part to individuals with very high credit scores. According to the company’s 2022 annual report, nearly 60% of its loans are single-family mortgages.
In March, 11 banks, including JPMorgan, deposited $30 billion with First Republic to shore up its finances. The company’s market value has fallen to $650 million as the stock price fell, according to Bloomberg.The bank was reported last week to be looking for divestiture of real estate assetsincluding its headquarters at 111 Pine Street in San Francisco, according to the San Francisco Business Times.
If JPMorgan were to buy First Republic, it would have to make an exception because it owns more than 10% of the nation’s deposits, a hurdle under federal law that prevents it from buying another bank, Bloomberg said.
Regulators are looking to sell First Republic, rather than a protracted auction like the one that followed the collapse of SVB and Signature Bank in March.
Swiss banking giant Credit Suisse was rescued by rival UBS last month.
The winner of the auction could be announced today or tomorrow, according to the BBC.
— Ted Glazer