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"First Republic" bank makes the last attempt to find a rescue agreement

2023-05-01 07:51:00, Ekonomi CNA

"First Republic" bank makes the last attempt to find a rescue

Illustrative photo

US regulators are racing to find a savior to buy First Republic Bank in a deal that could be announced on Sunday.

The Federal Deposit Insurance Corporation has reportedly asked six banks to make bids for the lender.

Shares in First Republic fell last week after it admitted that customers had withdrawn $100 billion in deposits in March.

By then, its competitor Silicon Valley Bank had collapsed, sparking fears of a wider banking crisis.

The failure of SVB was quickly followed by the failure of another US lender, Signature Bank.

According to reports, the Federal Deposit Insurance Corporation (FDIC), a US financial regulator, requested bids for First Republic by the end of last week and evaluated them over the weekend.

Investment banking giant JP Morgan Chase is believed to be one of the banks invited to bid for First Republic, according to Reuters news agency. Bank of America has also been approached about a deal.

Concerns about the global banking industry grew last month after problems emerged at Silicon Valley Bank.

Central banks around the world have raised interest rates sharply over the past year to reduce the rate of price increases, otherwise known as inflation.

At the same time in Europe, Swiss banking giant Credit Suisse - which has been embroiled in its own problems for several years - said it would need to borrow $54 billion from the country's central bank to shore up its finances.

Credit Suisse has since been bailed out by arch-rival UBS.

Like Silicon Valley Bank, First Republic is a mid-sized US lender. In March, a group of 11 US banks stepped forward to pour $30 billion into the "First Republic" in an effort to stabilize the business.

However, investors in the bank were shocked last week when "First Republic" revealed the amount that depositors had withdrawn in March.

First Republic counts wealthy individuals among its clients, whose money is potentially at risk if a buyer is not found. In the US, the FDIC insures deposits up to $250,000.

When Silicon Valley Bank and Signature collapsed, the FDIC stepped in to say it would guarantee all deposits to prevent a rush of people trying to get their money out, known as a bank run.

If it is unable to find a buyer for "First Republic", the FDIC may take similar actions./ CNA.al