First Republic, endless collapse. The US bank towards liquidation awaiting a white knight

MILAN – First Republic Bank could soon end up under the extraordinary administration of the American Federal Deposit Insurance Corporation, which has already intervened in the case of Svb. To then be piloted into the arms of another institute.

The possible intervention of the authorities has been reported, at Reutersfrom a confidential source on Friday, sending shares of the regional bank to another 50% plunge in after-market trading.

We are therefore at a turning point. At first, the interest of private individuals for an acquisition and rescue operation filtered through. Now, the authorities would be evaluating whether there is time to go ahead with this option or whether it is better to intervene directly.

If the San Francisco-based bank – which had recorded deposit outflows worth 100 billion in the first quarter of the year – were to be put into liquidation, it would be the third US bank to collapse since March.

According to the reconstruction of the Bloomberg rather we are at an ultimatum posed by the Fdic to potential interested parties: JPMorgan and PNC should advance their binding proposal for First Republic no later than Sunday, indicating the purchase price and expected cost for the deposit protection scheme. At least two institutes would have been identified for the final phase of the proposals, even if those directly involved did not respond to requests for comment. It would be a preferred solution to the emergency structured auction for Svb and Signature, but it is not yet clear whether or not to go through the administration of the deposit protection scheme.

Meanwhile, First Republic’s stock has plummeted even further, reaching a capitalization of 650 million which is 97% less than this year. A collapse which, on the other hand, makes the acquisition by other competitors more ‘feasible’. In the background, however, there is another regulatory problem: JPMorgan is among the few giants that already have a number of national deposits exceeding 10%, which prevents them from acquiring another national institution according to US regulations. A derogation would be needed to make the biggest national bank an even bigger institution.