Shares of First Republic Bank fell from $122.5 on March 1 to $3 on Friday, after speculation spread that the Federal Deposit Insurance Agency would take over the San Francisco-based bank’s deposits and assets, according to a report . CNN.
US authorities have asked several financial institutions to submit offers to buy the assets of troubled First Republic Bank since mid-March, an informed source told AFP.
It is expected to receive offers from four and six companies, the source added.
First Republic has been under severe pressure since the collapse of two similar banks in early March.
But the bank failed to reach a satisfactory rescue package, and its already battered stock fell after Monday evening confirmed that many of its customers had withdrawn more than $100 billion in deposits in the first quarter.
As a result, the authorities intervened in the file.
In this context, the source told AFP that the Bank Deposit Guarantee Agency and the Ministry of Economy contacted several banks interested in acquiring First Republic in the middle of the week.
According to the French agency, the source explained that the authorities allowed several companies to see additional financial information about the First Republic.
The Deposit Insurance Agency declined to comment on or confirm the information, and the US Federal Reserve and the Economy Ministry did not respond to Agence France-Presse’s requests for comment.
According to several American media, the deposit insurance company will manage the bank in the first phase, whose assets were $233 billion at the end of March.
The FDIC can quickly sell some or all of a bank’s assets to another institution.
According to CNBC, if the deal goes this way, it could be announced as early as Monday.
“While we continue to serve our customers, we are engaged in discussions with several parties regarding our strategic options,” First Republic Bank said Friday.
Depositors withdrew about 41 percent of their money from the bank in the first quarter, according to a financial statement released by the bank.
Most of the withdrawals were from accounts over $250,000, meaning these excess funds were not insured by the deposit insurance company, according to CNN.
Uninsured bank deposits fell $100 billion in the first quarter, while total net deposits excluding deposits from other banks fell $102 billion.
The bank said in its earnings report that insured deposits declined modestly in the last quarter and were flat from the end of last month to April 21.
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