US regulators are demanding banks offer their best and final takeover proposals for First Republic by Sunday in a bid to soothe markets and bring to a close a period of uncertainty for regional lenders. JPMorgan Chase and PNC are expected to be in the running for the ailing lender, which will be seized in receivership and immediately sold to the successful bidder. Other firms, including Bank of America, are also understood to be weighing a bid for First Republic, which collapsed after clients withdrew over $100bn in deposits. The bank’s situation worsened after Silicon Valley Bank failed in March. Regulators are expected to select the offer that results in the smallest financial hit to the FDIC for resolving First Republic.
Possible Bidders and Implications
The FDIC has requested that banks submit their final takeover bids for First Republic, in a move that could bring an end to a period of uncertainty for regional lenders. JPMorgan Chase and PNC are expected to be among the bidders for the ailing lender, which is set to be taken over in a receivership sale. Other banks are thought to be considering a bid for the lender, including Bank of America. The auction is expected to result in the takeover of one of the largest US banks, which will benefit from a government-brokered receivership process that leaves the FDIC holding undesirable assets. The banks that are expected to bid for First Republic are all represented in a group of 11 institutions that injected $30bn in deposits into the bank last month. Meanwhile, Wells Fargo, Goldman Sachs and Citigroup are unlikely to submit a bid for First Republic, according to insiders.
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