PNC and JP Morgan Win the Bid for First Republic Bank’s Assets

PNC Finan­cial Ser­vices Group and JPMor­gan Chase sub­mit­ted the win­ning bids for First Repub­lic Bank’s assets at an FDIC auc­tion, accord­ing to sources. Cit­i­zens Finan­cial Group Inc was also among the banks that placed bids for First Repub­lic Bank’s $233 bil­lion in total assets.

The Fed­er­al Deposit Insur­ance Cor­po­ra­tion is expect­ed to announce the acqui­si­tion deal on Sun­day evening and seize con­trol of First Repub­lic Bank at the same time, insid­ers revealed. As the auc­tion dragged on into the late hours, a source famil­iar with the process said reg­u­la­tors repeat­ed­ly request­ed revi­sions to nar­row down the bids to spe­cif­ic groups of assets. There were indi­ca­tions a deci­sion was imminent.

Reg­u­la­tors aimed to final­ize the sale of First Repub­lic Bank over the week­end, with about half of the bid­ding banks, sources not­ed on Sat­ur­day. It is like­ly to be the third major US bank fail­ure in the past cou­ple of months. Guggen­heim Secu­ri­ties is advis­ing the FDIC on the deal, accord­ing to two sources.

The pur­chase of First Repub­lic Bank’s assets wit­nessed the col­lapse of Sil­i­con Val­ley Bank and Sig­na­ture Bank amid deposit out­flows from US finan­cial insti­tu­tions and the Fed­er­al Reserve tak­ing emer­gency actions less than two months ago to sta­bi­lize the sys­tem. These bank­rupt­cies fol­lowed the vol­un­tary liq­ui­da­tion of cryp­tocur­ren­cy focused Silvergate.

First Repub­lic Bank ranked 14th largest among US finan­cial insti­tu­tions at the end of last year, as per Fed­er­al Reserve data, ahead of SVB at 16th and Sig­na­ture at 29th. The mar­ket has since calmed down but the First Repub­lic Bank deal will be close­ly observed to deter­mine how much gov­ern­ment sup­port it needs.

The FDIC offi­cial­ly guar­an­tees deposits up to $250,000. But fear­ing fur­ther bank fail­ures, reg­u­la­tors took the unusu­al step of guar­an­tee­ing all deposits of both Sil­i­con Val­ley Bank and Signature.

For SVB and Sig­na­ture, the FDIC estab­lished a “bridge bank” to pro­tect depos­i­tors. It remains to be seen if sim­i­lar mea­sures will be need­ed against First Repub­lic Bank. That would require approval from the Trea­sury Sec­re­tary, Pres­i­dent, Fed­er­al Reserve Board and FDIC Board of Governors.