2023-04-30 15:34:41
US regulators are racing to find a savior for the First Republic bank, in a buyout that could be announced as soon as possible.
Reportedly, the Federal Deposit Insurance Corporation asked six banks to submit offers to buy out the troubled lender.
Shares of First Republic Bank fell last week after it admitted that its clients had withdrawn $100 billion in deposits in March.
At that time, a rival bank, Silicon Valley, collapsed, sparking fears of a broader banking crisis.
The Silicon Valley bankruptcy was followed by the demise of another US lender, Signature Bank.
According to reports, the Federal Deposit Insurance Corporation, an official US financial regulator, sought offers for First Republic by the end of last week and was evaluating them over the weekend.
Archyde.com reported that JPMorgan Chase, the investment banking giant, was believed to be one of the banks invited to bid for the First Republic. He also revealed that Bank of America had been contacted.
JPMorgan declined to comment.
The Federal Deposit Insurance Corporation and Bank of America have also been contacted for comment.
Concerns about the state of global banks grew last month, with problems emerging at the Silicon Valley bank.
Central banks around the world have raised interest rates sharply over the past year to curb rising rate prices, also known as inflation.
This hurt the values of the large portfolios of bonds that banks bought when interest rates were low, which raised concerns that other banks 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 would have to borrow $54 billion from the country’s central bank to shore up its finances and Credit Suisse was then bailed out by its rival. The traditional UBS bank.
Like the Silicon Valley bank, the First Republic is a medium-sized US lender.
In March, a group of 11 US banks pumped a total of $30 billion into the First Republic in an effort to stabilize it. JPMorgan was among them.
However, investors in the First Republic were alarmed last week when it revealed how much its depositors had withdrawn in March.
The First Republic says the money of the wealthy among its clients could be at risk if no buyer can be found. In the United States, the Federal Deposit Insurance Corporation insures deposits up to $250,000.
And when the banks “Silicon Valley” and “Signature” collapsed, the “Federal Deposit Insurance Corporation” intervened and said that it would guarantee the insurance of all deposits, to prevent the rush of depositors to try to get their money out of the two banks, which makes the matter worse.
And if you can’t find a buyer for the First Republic, the Federal Deposit Insurance Corporation can take similar action.
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