The U.S. Federal Deposit Insurance Corp (FDIC) is in the process of seizing and selling the First Republic, a U.S. bank caught in the post-FTX banking crisis. It was expected that FDIC announced the bail-out results before the opening of the Asian stock exchanges on Monday. However, no announcement has been made yet.
According to the insiders, a half-dozen banks are participating in the bidding process, including JPMorgan Chase, Citizens Financial, and PNC Financial Services. They said investment bank Guggenheim advises the state-run Federal Deposit Insurance Corp (FDIC). The bidders were given access to First Republic’s books over the weekend. The FDIC said it plans to place the bank in receivership Monday night while announcing an agreement in the sale process.
The First Republic is already the third U.S. bank that recently came in distress because customers withdrew their deposits en masse. Silicon Valley Bank and Signature Bank went under in March because of this. In a concerted effort, central banks initially injected $30 billion into First Republic Bank, which was also reeling, to save it.
By the beginning of the week, however, First Republic had revealed a deposit outflow of more than $100 billion in the first quarter. As a result, the vicious cycle accelerated. Investors divested themselves en masse of shares in the bank, and the share price crashed on the stock market. On Friday, it was announced that the FDIC had identified further deterioration at the bank and launched a new bailout.
The Federal Reserve holds the government under former President Donald Trump partly responsible for the collapse of Silicon Valley Bank. In an investigative report, the Federal Reserve concludes that relaxations of precautions against financial crises enacted in 2018 contributed to the failure of the California regional institution. The Trump administration had weakened banking oversight, it said.