On Thursday, regulators with the Federal Deposit Insurance Corporation (FDIC) reached out to banks, including JPMorgan Chase and PNC Financial Services Group, soliciting bids on beleaguered San Francisco-based First Republic Bank, whose shares have dropped 97 percent this year, and on Friday the FDIC moved forward with plans to place the bank under receivership.
Reuters reports that sources familiar said that First Republic Bank's rapid decline meant a private sector rescue would not come fast enough, and that the FDIC would need to take a more active role and assume custodial responsibility for the bank.
Because matters are confidential the source spoke to Reuters from a place of anonymity. After news of the bank being placed in receivership by the FDIC, the bank's shares plummeted 50 percent on Friday in extended trading.
After a request for comment, the FDIC said, "We would not comment on or confirm whether we are bidding an open institution."
According to Bloomberg, the FDIC along with the Treasury Department and the Federal Reserve worked in tandem to help solicit private sector bids from other financial institutions on behalf of First Republic Bank, and said final bids needed to be in by Sunday.
On Friday, First Republic Bank stock lost half of its value, hitting a $2.99 record low, and marked a week's end for the bank where it lost 75 percent of its value.
The bank's peak valuation in November 2021 was over $40 billion but at its recent low it has been valued at $557 million.
Since the start of the first financial year quarter, the bank's deposits have dropped over $100 billion.
On March 10, Regulators with the FDIC seized Silicon Valley Bank (SVB) following a run on the bank and two days later theY shut down Signature Bank.
The fall of the banks was due in part to the financial institutions' lack of accounting for risk as many banks procured government bonds, on which interest was raised to offset the record setting high inflation.Join and support independent free thinkers!
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