US regulators are scrambling to find a buyer for First Republic Bank after the lender admitted customers had withdrawn $100 billion in deposits in March. The Federal Deposit Insurance Corporation reportedly approached six banks to bid for the median lender. The agency sought bids for First Republic late last week and has been evaluating them over the weekend. The bank’s possible collapse comes after the recent bankruptcies of Silicon Valley Bank and Signature Bank, which raised fears of a broader banking crisis.
The Federal Deposit Insurance Corporation (FDIC) is racing to find a savior for lender First Republic Bank after the bank revealed that customers had withdrawn $100 billion in deposits in March. The bank’s possible collapse has raised concerns of a broader banking crisis following the recent bankruptcies of Silicon Valley Bank and Signature Bank.
The FDIC has reportedly asked six banks to submit bids for First Republic and has been evaluating them over the weekend. The agency reportedly sought bids late last week.
JP Morgan Chase is believed to be among the banks invited to bid for First Republic, along with Bank of America. However, both banks declined to comment on the matter.
The global banking industry has been under pressure as central banks around the world have raised interest rates to combat inflation. This has caused the values ​​of large portfolios of bonds bought by banks to fall, raising concerns that other companies could face similar situations.
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In Europe, Swiss banking giant Credit Suisse recently revealed that it had to borrow $54 billion from the country’s central bank to shore up its finances. The bank has since been rescued by former rival UBS.
First Republic is a mid-sized American lender that counts wealthy people among its clients. In March, a group of 11 US banks invested $30 billion in First Republic to stabilize the business, including JP Morgan.
If a buyer is not found for the First Republic, its possible collapse could lead to a bank run. The FDIC has already stepped in to guarantee all deposits following the bankruptcies of Silicon Valley Bank and Signature Bank. In the United States, the FDIC insures deposits of up to $250,000.
Also read: Banking turmoil causes $72 billion deposit loss for First Republic