First Republic makes one last bid to find a bailout deal

image source, Getty Images

US regulators are trying to find a rescuer to buy First Republic Bank in a deal that could be announced as soon as Sunday.

The Federal Deposit Insurance Corporation has reportedly asked six banks to bid for the troubled lender.

Shares in First Republic plunged last week after it admitted that customers had withdrawn $100 million in deposits in March.

By then, competitor Silicon Valley Bank had collapsed, leading to fears of a major banking crisis.

SVB’s failure was quickly followed by the demise of another American lender, Signature Bank.

According to reports, the Federal Deposit Insurance Corporation (FDIC), a US financial regulator, sought bids for First Republic by the end of last week and has been considering them over the weekend.

Investment banking giant JP Morgan Chase is believed to be one of the banks invited to bid for First Republic, according to the Reuters news agency. Bank of America should also have been contacted.

The BBC has contacted the FDIC, JP Morgan and Bank of America for comment.

Concerns about the global banking industry gained momentum last month when the problems at Silicon Valley Bank emerged.

Central banks around the world have raised interest rates sharply over the past year to curb the rate of price increases, also known as inflation.

That has hurt the values ​​of the large portfolios of bonds bought by banks when interest rates were lower, and raised concerns that other firms faced similar situations.

Meanwhile in Europe, Swiss banking giant Credit Suisse – which had been mired in its own problems for a number of years – said it needed to borrow $54 billion from the country’s central bank to prop up the economy.

Credit Suisse has since been rescued by long-time rival UBS.

Like Silicon Valley Bank, First Republic is a mid-sized US lender. In March, a group of 11 US banks stepped forward to pump $30 billion into First Republic in an attempt to stabilize the business. They included JP Morgan.

However, investors in the bank were rattled last week when First Republic revealed the amount that depositors had withdrawn from the lender in March.

First Republic counts wealthy individuals among its clients whose money is potentially at risk if a buyer is not found. In the US, the FDIC insures deposits up to $250,000.

When Silicon Valley Bank and Signature collapsed, the FDIC stepped in to say it would guarantee all deposits to prevent a rush of people trying to get their money out, known as a bank run.

If it is unable to find a buyer for First Republic, the FDIC may take similar action.

Source link

Back to top button

mahjong slot