NEW YORK, April 30 — US financial authorities have reached out to several financial institutions asking them to make bids on the assets of troubled First Republic Bank, a source familiar with the matter told AFP.
First Republic has been under heavy pressure after the bankruptcies in early March of fellow regional banks Silicon Valley Bank and Signature Bank sparked fears of contagion.
But First Republic has failed to come up with a workable rescue plan and on Monday it disclosed that it had lost more than US$100 billion in deposits in the first quarter, causing its shares to plummet.
The federal government finally stepped in with the Federal Deposit Insurance Corporation, an agency in charge of guaranteeing bank deposits, and the US Treasury approaching six banks this week to gauge their interest in buying First Republic assets, according to the source, who spoke on condition of anonymity.
The source also said four of those six were likely to submit bids.
First Republic declined to comment.
Several US media reported that the FDIC would initially take control of First Republic as part of the rescue plan.
The agency would then quickly sell some or all of the bank’s assets to another institution.
According to CNBC, if the deal goes through, it could be announced early Monday to placate First Republic customers.
With its assets standing at US$233 billion at the end of March, First Republic would be the second largest bank to fall in US history — excluding investment banks, like Lehman Brothers — after Washington Mutual’s bankruptcy in 2008. — AFP
