Banks await news from the US government regarding the fate of San Francisco lender First Republic (FRC) after the deadline to submit bids passed.
TWC – Banks including JPMorgan Chase, Bank of America, PNC Financial Services Group, Citizens Financial Group and US Bancorp were invited to bid by the Federal Deposit Insurance Corporation. However, Bank of America and US Bancorp decided against making an offer.
Reports suggest that the FDIC may place First Republic into receivership and find a buyer among the big banks willing to take all of its deposits and some of its troubled assets. The FDIC will accept the bid resulting in less cost to the Deposit Insurance Fund.
JPMorgan is already above that cap, which puts CEO Jamie Dimon at the centre, Amidst a banking crisis at a national level for the second time in fifteen years.
First Republic tried to weather the turmoil by borrowing from the Federal Reserve and taking in $30 billion in uninsured deposits from 11 of the country’s largest banks, including JPMorgan. But the bank’s situation turned more severe after it disclosed a loss of over $100 billion in deposits, and its market value dropped to just $640 million.
The fate of First Republic remains uncertain as banks await a decision from the US government.