According to an unnamed source with knowledge of the matter, the Federal Deposit Insurance Corporation (FDIC) is set to take control of First Republic Bank in the near future.
The FDIC has reportedly determined that the regional bank’s financial position has worsened to the point that private sector intervention is no longer viable.
Both the FDIC and First Republic declined to comment on the situation when reached for response.
First Republic Bank saw its stock plummet to an all-time low as investors assessed potential rescue plans, none of which bode well for current shareholders. After briefly rising by 6.6%, the San Francisco-based bank’s shares plummeted by over 50% before trading was halted due to widespread speculation that regulatory takeover, although not the only possibility, is increasingly likely.
According to unidentified sources cited by Reuters, US officials are holding discussions to rescue First Republic, with the Federal Deposit Insurance Corp., the Treasury Department, and the Federal Reserve leading negotiations on a possible lifeline.
However, some of the largest US banks, which have already contributed $30 billion in deposits to support First Republic, have reportedly declined to become more involved, fearing that it could be a case of throwing good money after bad, as per Bloomberg News.
As reported by CNBC, the focus of the rescue plan has now shifted to a US takeover. Meanwhile, First Republic has confirmed that it is engaging with various parties to explore strategic options.
