Federal regulators are racing to seize and sell First Republic Bank as soon as this weekend, a source familiar with the matter told ABC News.
A takeover of the embattled regional bank would be part of a broader effort by the federal government to stem the banking crisis initiated by the failure of Silicon Valley Bank last month.
One option is for the FDIC to take control of First Republic Bank, then quickly sell its assets to another private bank. Or, if no deal with a private bank is reached, the FDIC might need to take full ownership of First Republic itself.
In that second scenario, it’s unclear whether the FDIC would make all uninsured deposits whole, as it did with SVB and Signature Bank. Officials at the Treasury Department and Federal Reserve would likely need to sign off on a plan to cover First Republic’s uninsured deposits by deeming it a “systemic risk exception,” as they did with the other two failed banks in March.
Typically, regulators seek to finalize takeover deals before Sunday night when financial markets reopen in Asia.
MORE: Is this a banking crisis? What to know about the Silicon Valley Bank collapse
First Republic Bank’s stock dropped around 75% last week after it revealed customers pulled more than $100 billion in deposits during the banking sector turmoil last month. A $30 billion rescue package for First Republic from 11 of the nation’s biggest banks in March was not enough to quell investors’ worries about the bank’s finances.
At the end of 2022, California-headquartered First Republic Bank was the 14th biggest commercial bank in the country, according to Federal Reserve data.
Top U.S. officials insist the American banking system is safe and resilient in the wake of coordinated action regulators took last month.
“Americans can rest assured that our banking system is safe,” President Joe Biden said in a statement last month. “Your deposits are safe. Let me also assure you, we will not stop at this. We’ll do whatever is needed.”
The FDIC and First Republic declined to comment.
Federal regulators race to seize and sell First Republic Bank originally appeared on abcnews.go.com
