© Reuters. On the verge of bankruptcy?First Republic Bank (FRC.US) may be taken over by the FDIC
First Republic Bank (FRC.US) plunged again, and the bank may eventually be taken over by the Federal Deposit Insurance Corporation (FDIC). As of Friday’s close, the stock was down 43.3% at $3.51.
Zhitong Finance APP learned that the stock price of First Republic Bank erased its pre-market gains early Friday, and the stock rose 8.8% on Thursday. Citing a person familiar with the matter, the media reported that it was becoming less and less likely that First Republic would remain independent and that the FDIC would take over. The FDIC is asking the banks whether they might make a bid if the bank is taken over, the report said.
The report pointed out that officials from the US government, the Federal Reserve and the Federal Deposit Insurance Corporation are coordinating a meeting to provide a rescue to First Republic Bank. Such rescues typically occur on weekends, avoiding trading hours. It was unclear if or how U.S. authorities were involved. Separately, the Biden administration is skeptical of First Republic’s efforts to find a private-sector solution. In March, JPMorgan and other big banks put $30 billion in deposits with the bank to ease concerns.
A spokesman for First Republic Bank said: “We are discussing our strategic options with various parties while continuing to provide services to our customers.” Alexander Yokum, an analyst at CFRA Research in the United States, believes that the most likely scenario is that, The FDIC takes over and sells First Republic, or sells the bank’s assets to other financiers.
Since First Republic Bank announced on the 23rd that depositor deposits dropped by more than $100 billion in the first quarter, its stock price has continued to fall. Trading has been suspended several times in recent trading days due to intense volatility. Other regional lenders have come under scrutiny as First Republic faces a cyclical sell-off after Silicon Valley Bank collapsed in March.
Although many media reports have focused on the possible rescue plan for the bank, it has not been concretely realized so far.
