Report: First Republic Could Seek a Rescue From the FDIC

First Republic Bank is reportedly considering asking the government to take over its operation.

According to a Tuesday (April 25) Financial Times (FT) report, that’s one of the paths the struggling lender is pursuing following the revelation that customers had pulled $100 billion in deposits during the March banking crisis.

It was what officials at the bank have called an “unprecedented” outflow of deposits, leading First Republic to pursue a number of options to right its ship.

The report, citing multiple sources with knowledge of the situation, said First Republic was struggling to find a viable solution as its stock price plummeted.

PYMNTS has contacted First Republic for comment but has not yet received a reply.

The sources told the FT the bank was in contact with the federal government, and that one of the leading options was for the Federal Deposit Insurance Corp. (FDIC) to take control of First Republic and guarantee its deposits, as it did when Silicon Valley Bank and Signature Bank collapsed last month.

However, a separate report by Bloomberg News Tuesday — also citing unnamed sources — said 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.

Another possible path forward, per the FT: a rescue by the banking giants that deposited $30 billion into First Republic in March.

The banks — including J.P. Morgan Chase and Bank of America — made that deposit following reports that First Republic had been downgraded by Fitch Ratings and S&P Global Ratings and was considering a sale and options to boost its liquidity.

According to the FT, another person close to the bank said First Republic would be amenable to the government “convening the relevant parties to come up with a solution.”

The bank on Monday (April 24) announced it would cut its workforce by up to 25% during the second quarter as it looks to reduce expenses.

“With the stabilization of our deposit base and the strength of our credit quality and capital position, we continue to take steps to strengthen our business,” First Republic Founder and Executive Chairman Jim Herbert and CEO and President Mike Roffler said in a news release. “We remain fully committed to serving our communities, and we are grateful for the ongoing support of our clients and colleagues.”