FDIC asks banks to submit final bids for First Republic by Sunday: report
The bidding process could pave the way for a tidier sale of First Republic than the drawn-out auctions that followed the collapse of Silicon Valley Bank and Signature Bank last month
The Federal Deposit Insurance Corp. (FDIC) has asked banks including JPMorgan Chase & Co., PNC Financial Services Group Inc., US Bancorp and Bank of America Corp. to submit final bids for First Republic Bank by Sunday, a Bloomberg report said on Sunday.
Citizens Financial Group Inc. is also involved in the bidding, a Reuters report said.
On Thursday, the regulator reached out to some banks seeking indications of interest, including a proposed price and an estimated cost to the agency’s deposit insurance fund.
The FDIC kick- started the bidding process this week, the Reuters report said. The bidders were told to give non-binding offers by Friday and were studying First Republic's books over the weekend, the report added.
A deal is expected to be announced on Sunday night, the Reuters report also said.
A few proposals that surfaced in recent days have called for a consortium of stronger banks to buy assets from First Republic for more than their market value.
The bidding process could pave the way for a tidier sale of First Republic than the drawn-out auctions that followed the collapse of Silicon Valley Bank and Signature Bank last month.
In March, a group of 11 banks had deposited $30 billion into First Republic giving it time to find a private-sector solution.
The stock of First Republic Bank is down 97% this year. On Friday, the stock closed at $3.51, 43.30% lower.
By Friday, First Republic's market value had hit a low of $557 million, down from its peak of $40 billion in November 2021.
Weighing on First Republic’s balance-sheet is a mountain of low-interest loans, including an unusually large portfolio of jumbo mortgages to wealthy clients. Such debts have lost value amid interest-rate hikes, leaving the firm facing losses if forced to sell them.
(With inputs from agencies)
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