Saudi Press

Saudi Arabia and the world
Tuesday, Mar 18, 2025

FDIC prepares to place First Republic under receivership

FDIC prepares to place First Republic under receivership

The U.S. Federal Deposit Insurance Corporation (FDIC) is preparing to place First Republic Bank (FRC.N) under receivership imminently, a person familiar with the matter said on Friday, sending shares of the lender down nearly 50% in extended trading.

The U.S. banking regulator decided the troubled regional lender's position has deteriorated and there is no more time to pursue a rescue through the private sector, the source told Reuters, requesting anonymity because the matter is confidential.

U.S. officials have coordinated urgent talks to rescue the lender in recent days as private-sector efforts led by the bank's advisers have yet to reach a deal, according to three sources familiar with the situation.

The FDIC, Treasury Department and Federal Reserve are among government bodies that have orchestrated meetings with financial companies about putting together a solution for the troubled lender, two of the sources said.

The FDIC asked banks including JPMorgan Chase & Co (JPM.N) and PNC Financial Services Group (PNC.N) to submit final bids for First Republic Bank by Sunday, Bloomberg News reported on Saturday.

The banking regulator reached out to banks late Thursday seeking indications of interest, including a proposed price and estimated cost to the agency's deposit insurance fund, the report said.

The FDIC said in an email: "We would not comment on or confirm whether we are bidding an open institution," in response to a request for comment.

PNC Financial declined to comment on the Bloomberg report. JPMorgan did not immediately respond to a voicemail and email seeking comment.

Separately, the Wall Street Journal reported on Friday that JPMorgan and PNC are vying to buy First Republic following its seizure by the government, which could come as soon as this weekend.

If the San Francisco-based lender falls into receivership, it would be the third U.S. bank to collapse since March. First Republic said this week its deposits had slumped by more than $100 billion in the first quarter.

Shares of the bank closed down 43%, worsening a stock rout that has wiped out 75% of its value this week. The stock lost more than half of its value on Friday and touched a record low of $2.99.


At its lowest, the bank had a market capitalization of nearly $557 million, a far cry from its peak valuation of more than $40 billion in November 2021.

Shares of some other regional banks also fell, with PacWest Bancorp (PACW.O) down 2% after the bell while Western Alliance (WAL.N) was down 0.7%.

News of the imminent move to put First Republic in receivership came the same day the Federal Reserve and FDIC detailed their supervisory lapses before deposit runs caused the collapse of Silicon Valley Bank and Signature Bank in March.

The Fed's assessment of its inadequacies in identifying problems and pushing for fixes at Santa Clara, California-based SVB came with promises for tougher supervision and stricter rules for banks.

Large banks had orchestrated an earlier lifeline for First Republic, injecting into the bank $30 billion in combined deposits from U.S. banking heavyweights, including Bank of America Corp. (BAC.N), Citigroup Inc. (C.N), JPMorgan and Wells Fargo & Co (WFC.N).

But First Republic struggled to find support from larger banks or private equity firms on its proposed move to create a so called "bad bank" or sell assets such as securities and its mortgage book.

The large banks who placed the deposits either declined to comment or were not available to comment.

First Republic, which reported its first-quarter earnings on Monday, had said it plans to shrink its balance sheet and slash expenses by cutting executive compensation, paring back office space and laying off 20% to 25% of employees in the second quarter.

John Guarnera, senior corporate analyst at RBC BlueBay Asset Management, said the First Republic case is an "evolving situation."

"The rest of the regional bank system feels like it's in a different place than where FRC is," he said.

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
China Introduces 'Zhulong' C-14 Nuclear Battery Promising a Lifespan of Up to 5,730 Years
High-Ranking ISIS Official Eliminated in Coordinated Operation in Iraq
Netanyahu Rejects UN Findings on Gaza as 'Incorrect'
Six Americans Freed from Detention in Kuwait
Absher Electronic Platform Facilitates Over 430 Million Transactions in 2024
Saudi Grand Mufti Issues Fatwa Against Social Media Posting of Prayers
High-Level Meeting in Doha Addresses Gaza Reconstruction Efforts
Haramain High Speed Railway Expands Operations During Ramadan
Over 9.7 Million Worshipers Visit Prophet's Mosque During First Ten Days of Ramadan
Historic Jeddah Talks Seek Ceasefire in Ukraine Conflict
Saudi and US Defense Ministers Discuss Security Cooperation
Saudi Finance Minister Discusses Economic Cooperation with US Treasury Secretary
Saudi Arabia Hosts US-Ukraine Talks as Part of Global Peace Efforts
Automated Umbrellas Enhance Comfort at the Prophet’s Mosque in Madinah
Saudi Arabia Commemorates Flag Day: A Celebration of National Identity
Ukrainian President Zelenskyy Arrives in Jeddah for Peace Talks
Saudi Hajj Minister Announces Stringent Measures for Service Providers
Saudi Arabia's Industrial Production Index Reports 1.3% Increase in January 2025
Saudi Foreign Minister and UN Envoy Discuss Humanitarian Aid for Gaza
Jeddah Historic District Attracts Over One Million Visitors in Ramadan's First Week
Saudi Justice Minister Advocates for Consistent Legal Reasoning in Judicial Rulings
US and Ukraine Engage in Peace Talks in Saudi Arabia Amid Ongoing Conflict
PIF Launches Al Waha: First Saudi-Owned Duty-Free Retail Operator
Saudi Arabia Launches First Duty-Free Operator to Enhance Travel Retail Market
Saudi Economy Sees Growth in Liquidity as 2024 Ends
Morgan Stanley Saudi Arabia Approved as Market Maker for Eight Listed Securities
ACWA Power Launches First Overseas Innovation Center in China
Saudi Arabia's Tadawul Leads Arab Exchanges with 62% Market Share in 2024
Saudi Arabia's Economy Grows 1.3% in 2024 Led by Non-Oil Sector Expansion
Oil Prices Decline Amid Global Tariff Concerns and Rising OPEC+ Output
Egypt's Annual Inflation Declines to 12.8% in February 2024
Saudi Arabia to Host Second Human Capability Initiative Conference in Riyadh
Major Drug Smuggling Attempt Foiled in Riyadh
Eastern Province Unveils Green East Initiative to Combat Desertification
Humanitarian Aid Efforts in Niamey and Dhaka: Food Baskets Distributed
Makkah's Hospitality Facilities Surge by 80% in 2024
Saudi Crown Prince Meets US Secretary of State Ahead of Ukraine Talks
Madinah Students Participate in Environmental Cleanup Initiative
Pakistani Community Hosts Annual Iftar Gathering in Jeddah
Saudi Deputy Minister Engages with French Ambassador in Riyadh
Saudi Arabia Distributes Dates in Malawi and Uzbekistan as Part of Charitable Initiative
Aramco's CEO Advocates for New Energy Model at CERAWeek 2025
Sharjah's Economic Growth Projected at 7.5% by 2025, Strengthening Sector Hub Status
Saudi Arabia's Industrial Output Sees Yearly Growth in January
Middle East Positioned for Private Equity Growth Amid Global Market Recovery
Crown Prince Mohammed bin Salman Meets with Ukrainian President Volodymyr Zelensky in Riyadh
Saudi Foreign Minister Engages with UN Official Over Gaza Developments
Balancing Work and Spirituality During Ramadan in Saudi Arabia
Syria Wraps Up Military Campaign Amid Extensive Violence and Large-Scale Killings
Workshop on Combating Money Laundering Held in Riyadh
×