The U.S. government is trying to orchestrate a rescue of First Republic Bank with the aid of the nation’s biggest banks, according to people with knowledge of the matter, after the California lender’s shares plunged.
Banks including JPMorgan Chase, Citigroup, Bank of America and Morgan Stanley are part of the discussions, said some of the people, asking not to be identified because the talks are private.
Details of the rescue, which are still being worked out, may be announced as soon as Thursday, one of the people said.
Representatives from the banks and the Federal Reserve either declined to comment or didn’t immediately respond to requests for comment. A spokesman for San Francisco-based First Republic also declined to comment.
Several large banks were discussing a potential deal with First Republic that could include a sizable capital infusion to shore up the troubled California lender, the Wall Street Journal reported earlier Thursday, citing people familiar with the matter.
First Republic was working on potential options including a capital raise, the people told the Journal. While a full takeover of the bank is also possible, some of the people said that looks unlikely at this point, the Journal said.
First Republic’s stock plunged as much as 36% Thursday. The bank is exploring strategic options including a sale, and was expected to draw interest from larger rivals, Bloomberg News reported late Wednesday. The lender’s shares have plummeted in the aftermath of regulators’ seizure of fellow regional lenders Silicon Valley Bank and Signature Bank over the past week.
First Republic specializes in private banking and wealth management, and has made an effort to differentiate itself from SVB Financial Group’s Silicon Valley Bank. Unlike SVB, which counted startups and venture firms among its biggest clients, First Republic said that no sector represents more than 9% of total business deposits.
SVB’s Silicon Valley Bank collapsed into Federal Deposit Insurance Corp. receivership Friday after its customer base of tech startups grew concerned and pulled deposits.
First Republic Bank has been working with JPMorgan as it works through its challenges. On Sunday, the same day Signature Bank was taken over by regulators, First Republic said it “further enhanced and diversified its financial position” by securing additional liquidity from the Federal Reserve Bank and JPMorgan.
— With assistance from Sridhar Natarajan, Jenny Surane, Gillian Tan and Allyson Versprille.
