Time running out for US financial firms to bid for ailing bank First Republic

theguardian.com:

US regulators are racing to secure the sale of California bank First Republic, which is on course to become the third American lender to fail this year, a sequence of collapses that has drawn uncomfortable parallels with the 2008 global financial crisis.

Half a dozen US banks are in the running to take over stricken First Republic, according to reports over the weekend, with leading bidders including JPMorgan Chase, Citizens Financial and PNC Financial Services.

The Federal Deposit Insurance Corp (FDIC), based in Washington DC, is running the auction process and has set a deadline of the end of last week for potential buyers to submit nonbinding offers.

Suitors were on Sunday weighing up which of First Republic’s assets they want to buy before making final bids, according to reports, raising hopes that a deal could be sealed on Sunday night, averting market instability when Asian markets open.

Any deal would come less than two months after Silicon Valley Bank (SVB) and Signature Bank both failed, as investors withdrew funds en masse, forcing the Federal Reserve to step in with emergency measures.

Should state-funded financial support be required to get the deal over the line, it would need approval from the Treasury secretary, the president and supermajorities of the boards of the Federal Reserve and the FDIC.

On Friday, trading in First Republic was briefly halted after its share price plunged close to 50%, the second such fall in a week. Its market value touched a low of $557m, down from its peak of $4bn in November 2021.

Days earlier, the bank revealed it had lost $100bn in deposits during last month’s banking crisis, as depositors responded to the collapse of Signature and SVB by pulling cash from weaker lenders.

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