UPDATED (Sunday, April 30, 3:25 p.m.) The Federal Deposit Insurance Corp. set a deadline for noon today for banks to bid on San Francisco-based lender First Republic Bank, according to multiple reports.
The FDIC asked up to six banks, including JP Morgan Chase & Co., PNC Financial Services Group, Inc., and Bank of America to bid on the beleaguered lender after gauging interest late last week, Bloomberg first reported, citing sources close to the matter.
The FDIC reached out to banks Thursday to gauge interest, including a possible price and cost to the regulator’s deposit insurance fund, in an effort to stave off receivership, the outlet reported. A result on the auction is expected this evening, Bloomberg reported.
Shares of First Republic plummeted last week following the revelation Monday that customers had withdrawn $102 billion since last month, as it grappled with holding fixed-rate mortgages with low interest rates.
First Republic is mostly in the business of lending to homeowners, and for the most part, to individuals with very high credit scores. Almost 60 percent of its loans were single-family mortgages, according to the firm’s 2022 annual report.
In March, 11 banks, including JP Morgan, deposited $30 billion into First Republic to shore up its finances. Following the drop in stock price, the company’s market value has fallen to $650 million, Bloomberg said. The bank last week was reportedly looking to spin off real estate holdings, including its headquarters at 111 Pine Street in San Francisco, according to the San Francisco Business Times.
If JP Morgan were to acquire First Republic, an exception would have to be made because it has more than 10 percent of the nation’s deposits, a barrier under federal law that would prohibit it from taking over another bank, Bloomberg said.
The regulator is seeking a sale of First Republic rather than a protracted auction like the ones following the collapses of SVB and Signature Bank in March.
Credit Suisse, the Swiss banking behemoth, was rescued by rival UBS last month.
A winner of the auction could be announced today or tomorrow, according to the BBC.
— Ted Glanzer