-
First Republic Bank is set to be taken over by regulators as soon as Sunday.
-
JPMorgan and PNC are frontrunners to acquire the ailing bank, The Wall Street Journal reported.
-
JPMorgan’s Dimon has been a hands-on figure in attempts to save First Republic in recent weeks.
Jamie Dimon might have avoided getting involved in a rescue of Silicon Valley Bank, but it appears that the JPMorgan CEO is preparing to swoop on ailing First Republic Bank.
JPMorgan Chase and PNC Financial Services Group are in the running to buy First Republic as the troubled lender stares down impending receivership, The Wall Street Journal reported.
The Federal Deposit Insurance Corporation (FDIC) is preparing to put First Republic in receivership, outlets including The Journal and Reuters reported Friday.
The bank’s shares collapsed further after the market closed on the news. First Republic is worth 97% less than it did before Silicon Valley Bank collapsed last month.
Bloomberg reported that JPMorgan and PNC had been given a Sunday deadline by the FDIC to submit final bids for the ailing bank.
The emergence of the potential bids for First Republic come after a chaotic seven weeks marked by several attempts to rescue the lender.
Dimon worked with Janet Yellen and the Federal Reserve on the day of SVB’s collapse to offer a $70 billion credit line to First Republic to shore up its finances. The bank also received a $30 billion deposit from 11 major banks including JPMorgan and PNC.
While the cash stabilized the bank for a while, the release of earnings this week sparked fresh turmoil after First Republic revealed that deposits fell 41% to $104 billion in the first three months of 2023.
In the period since SVB’s collapse, First Republic has scrambled to save itself from collapse.
This included hiring investment bankers to advise on its options and floating a plan to sell its loans and securities above their market rate, per The Journal. In the wake of its first quarter results, the bank also promised to slash executive pay and cut jobs.
That’s not been enough for the bank to survive on its own, however.
Dimon’s active involvement in First Republic contrasts his decision to steer clear of any rescue for Silicon Valley Bank.
Regulators bailed out SVB’s customers, many of which were startups with huge amounts of their deposits uninsured at the time of the bank’s collapse.
With SVB, Dimon was more vocal in urging against tighter regulation, arguing they wouldn’t have stopped a run on its deposits.
“It is extremely important that we avoid knee-jerk, whack-a-mole or politically motivated responses that often result in achieving the opposite of what people intended,” Dimon said in a letter to shareholders in early April.
JPMorgan declined to comment. PNC didn’t immediately respond to Insider’s request for comment.
Read the original article on Business Insider
Source: finance.yahoo.com