Multiple large banks in the US have shown interest in taking over the crisis-hit First Republic after it gets into the Federal Deposit Insurance Corporation’s receivership, according to reports.
According to Yahoo Finance, JPMorgan Chase, Bank of America and PNC have likely shown interest in participating in the bid for the First Republic. The FDIC has placed a Sunday noon deadline for the submission of the bids.
Initial Rescue Deal
JPMorgan Chase and Bank of America were among the banks that were part of a $30 billion rescue deal for First Republic in March. While these banks, along with Citigroup and Wells Fargo committed $5 billion each, other banks like Goldman Sachs, Morgan Stanley, US Bancorp, Truist, PNC, State Street and Bank of New York Mellon chipped in with amounts ranging from $1 to $2 billion each.
Troubles at California-based First Republic Bank started in the aftermath of the bank run on Silicon Valley Bank that led to its eventual collapse and takeover by the regulators. As the bank came under pressure, its shares lost more than a third of their value, as investors were spooked by the failure of SVB and Signature Bank.
Adding to the pressure, S&P Global and Fitch Ratings downgraded First Republic’s credit rating. According to the rating agency, deposit withdrawals were a potential problem for First Republic as well.
First Republic Shares Plunge
Earlier this week, shares of crisis-hit bank First Republic plunged after reports said there was a dim outlook for a timely rescue. Trading was halted several times even as the stock nosedived as much as 40 percent amid reports that the bank could be taken into receivership by the Federal Deposit Insurance Corporation.
Friday’s plunge means the stock has lost more than 90 percent after reports in March brought out liquidity crisis at the bank. The stock is trading at a little over $3 on Friday, which is an all-time low.
The shares of the First Republic were at $16 at the beginning of the week, but they slid fast after the bank’s first-quarter results showed that deposits had declined 40 percent.
Meanwhile, FDIC, the Treasury Department and the Federal Reserve are working on various options to stem the crisis at the First Republic bank, Wall Street media outlets reported.
In the aftermath of the worsening crisis, some analysts have said First Republic is unlikely to survive. It is “unlikely” the bank will survive said analysts Timothy Coffey of Janney Montgomery Scott said, according to Yahoo Finance. The analysts said this when they were asked about a CNBC report that First Republic (FRC) is likely headed for FDIC receivership, the outlet reported.