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First Republic Bank Up for Grabs in FDIC Auction

TRUTH PUKE’S TAKE: U.S. regulators are currently overseeing an auction process to sell First Republic Bank to one of the half a dozen interested bidders, which include Citizens Financial Group, JPMorgan Chase, PNC Financial Services Group, and US Bancorp. The Federal Deposit Insurance Corp (FDIC) is running the auction process, with Guggenheim Securities advising. Bidders were asked to give non-binding offers by Friday and are currently studying First Republic’s books.

A deal is expected by Sunday night before Asian markets open, with the regulator likely to declare that it has seized the lender.

First Republic’s market value has plummeted to $557 million, down from its peak of $40 billion in November 2021. First Republic would be the third major U.S. bank to fail in two months, following Silicon Valley Bank and Signature Bank.

The FDIC is trying to find a buyer for the bank before closing it down and has turned to some of the largest U.S. lenders to do so. However, regulators may have to insure all deposits at First Republic, as they did at Silicon Valley Bank and Signature Bank, to prevent further bank runs, which would require approval by the Treasury secretary, the president, and super-majorities of the boards of the Federal Reserve and the FDIC.

The situation underscores the need for regulators to closely monitor regional banks and ensure they are adequately capitalized to weather economic shocks.

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