Report: JPMorgan and PNC Among Bidders for First Republic

PNC and JPMorgan Chase were reportedly among the bidders vying to own First Republic Bank.

U.S. regulators auctioned off the struggling bank Sunday (April 30), according to a report by Reuters. Sources told the news outlet the Federal Deposit Insurance Corp. (FDIC) is expected to announce a deal on Sunday night before Asian markets open.

At the same time, sources said, the FDIC will likely announce it had seized First Republic, marking the nation’s third bank failure in the last eight weeks.

Over the course of one weekend in March, the government took control of both Silicon Valley Bank and Signature Bank following a run on deposits, forcing the Federal Reserve to take extraordinary measures to cover depositors.

As that banking crisis unfolded, First Republic began to struggle. The Reuters report notes that the bank’s strategy of courting wealthier customers made it more vulnerable than other regional lenders, as nearly 70% of its deposits were uninsured.

First Republic lender saw more than $100 billion in withdrawals from its coffers in the first quarter, leaving it in a mad dash to raise money. The revelation of its “unprecedented” level of withdrawals left the bank on even shakier ground, as its stock price – which had already declined 96% since last year – lost half its remaining value.

And although it received a $30 billion lifeline from 11 of the country’s banking giants, it continued to struggle. As of last week, First Republic was reportedly seeking a rescue by the FDIC or hoping to be purchased by one of those large banks.

The FDIC, meanwhile, had reportedly threatened to downgrade First Republic, thus limiting its ability to borrow from the Federal Reserve.

Last week also saw reports that First Republic was looking to sell off long-dated mortgages and securities amounting to $50 billion to $100 billion in hopes of avoiding being seized by the FDIC.

However, one source told Reuters Friday (April 28) that the FDIC had determined that First Republic’s situation had devolved to the point there was no time to pursue acquisition by a private sector owner.