JP Morgan, PNC said to be in talks with regulators about taking over hobbled lender
The First Republic Bank headquarters in San Francisco. Shares of First Republic Bank resumed their punishing slide on Friday, adding to a string of losses this week that have come as doubts over the future of the regional lender intensified. Photograph: Ian C.
The effort, led by the Federal Deposit Insurance Corporation , comes after First Republic’s shares tumbled 75% since Monday, when the bank disclosed that customers had withdrawn more than half of its deposits. It became clear this past week that nobody was willing to ride to First Republic’s rescue before a government seizure because larger banks were worried that buying the company would saddle them with billions of dollars in losses.
The FDIC has been talking with banks that include JPMorgan Chase and PNC Financial Services about a potential deal, two of the people said. A deal could be announced as soon as Sunday, these people said, cautioning the situation was rapidly evolving and might still change. Any buyer would most likely assume the deposits of First Republic, eliminating the need for a government guarantee of deposits in excess of $250,000 — the limit for deposit insurance.
It’s possible that an agreement won’t be reached, in which case the FDIC would need to decide if it would seize First Republic and take ownership itself. In that case, federal officials could invoke a systemic risk exception to protect those bigger deposits, something they did last month after the failures of Silicon Valley Bank and Signature Bank.
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