Time running out for US financial firms to bid for ailing bank First Republic

hank

The Guardian

This article pretty much sums up what I’ve been getting from several other financial sources today, including Bloomberg. But most are nearly impossible to link.

So … The FDIC is holding an auction, but few takers. A 4 PM Sunday deadline came and went. The axe welded by the FDIC is the implicit threat that should First Republic fall into receivership, the Fed would need to sharply increase the fees the big banks pay into its rapidly depleting insurance fund. A bit of a Catch-22 for the big banks. Plus, JPM would need a special exemption as it holds close to the 10% of deposits among all banks - a regulatory limiting factor.

yogibearbull

There is nothing in the news yet on FRC.

The US futures and Asian markets (Japan, Australia) aren't showing anything unusual.

All bids (possibly from JPM, BAC PNC, CFG USB) were due by 4pm Eastern, so we are a few hours past that. PNC is rumored to be in the lead. JPM and BAC are both already well over the 10% US deposits limits; CFG seemed a last minute addition; USB has its own issues. So, PNC seems to be an easier regulatory choice and is big enough to swallow parts of FRC. Clearly, FRC has to go through FDIC hands - the FDIC may have to keep some underwater HTM and real estate assets, and sell only the better parts. Nobody will buy the whole of FRC because the M&A rules will require immediate mark-to-market of the underwater HTM and real estate portfolio.

Edit/Add: I am monitoring Twitter. Some have posted that they can still logon to FRC website, so nothing has happened yet. One fellow said that JPM won the auction but I cannot verify it.

rforno

My friend and I could only find about 83 cents in the sofa, but we thought that could be a solid contender for the bidding war...and we had no regulatory concerns, which would've made things even easier. But alas, the phone rang and I missed the submission cutoff. Oh, well.

Observant1

I thought an announcement would be made before Asian markets opened.
The Tokyo Stock Exchange and Korea Exchange opened approximately 1.5 hours ago.
There hasn't been any news yet...

hank

Several markets in Europe and Asia are closed Monday, May 1 for holidays.

83-cents sounds about right …

Here’s a blip copied from Bloomberg online media posted at 9:48 PM - ”US regulators were working into the night to resolve the First Republic Bank (FRC) crisis late Sunday after a midday deadline passed for submitting final bids to take over the struggling lender.”

Nice to hear @yogibearbull is monitoring & on top of this …

yogibearbull

JPM got FRC.
https://www.fdic.gov/news/press-releases/2023/pr23034.html

Edit/Add: FRC is still trading AND collapsing. Somebody has yet to turn its pre-market quotes OFF. Edit/Add3 - The last quote/trade was at 6:39am Eastern (and then at 8:01am & trading resumed later).
https://finance.yahoo.com/quote/FRC/profile?p=FRC
https://www.nasdaq.com/market-activity/stocks/frc

Edit/Add2: JPM press release
https://www.jpmorganchase.com/ir/news/2023/jpmc-acquires-substantial-majority-of-assets-and-assumes-certain-liabilities-of-first-republic-bank

yogibearbull

First Republic Bank/FRCB is now trading in the Pink Sheets at about 40c. IMO, it is about 40c too high (-:).
https://finance.yahoo.com/quote/FRCB?p=FRCB&.tsrc=fin-srch