Saturday, April 29, 2023

JPMorgan, PNC To Buy First Republic After FDIC Seizure First Leaves Taxpayers Holding The Toxic Stuff

 As the weekend begins, the WSJ reports late on Friday that big banks including JPMorgan and PNC are set to buy First Republic Bank but not in a private, market-arranged deal but rather in a transaction that would follow a government seizure of the troubled lender.

Update: As many expected given the intraday collapse of FRC, Reuters reports after the bell that The FDIC will imminently the bank into receivership.

Shares collapsed to a $1 handle in the after hours trading, down 70% on the day.... FRC was trading at $120 at the start of March... and now it's trading close to $1.20.... ...Aaaaand it's gone.... * * *. Update: First Republic Bank shares are halted for volatility having collapsed 50% back to record lows as hopes of a 'private' deal fade.... Former Treasury Secretary Lawrence Summers criticized Washington regulators and US banking giants for not having already figured out a solution for the beleaguered lender First Republic Bank.

The First Republic farce rolls on.... After reporting dramatically worse deposit outflows, The FT reports that there had been a shift in tone among the First Republic Bank's advisers compared with Tuesday and Wednesday when First Republic's shares fell 65 per cent and fears grew that it was close to being taken over by the FDIC. The conversations about the bank reportedly remain fraught, and the people cautioned that it was not clear that a solution would be found.

Specifically, The FT reports that one proposal that may be part of an eventual solution is for some of the banks to buy some of First Republic's long-dated assets for more than their current market price, allowing the lender to shrink its losses.

Bear in mind that the 'Big Banks' have $30 billion in deposits at the embattled bank... so the FDIC has a problem already.

FRC Bonds ain't buying it at all.... First Republic shares were up around 5% in the pre-market, but have already erased the earlier stronger gains.... Just to put that into context, here's FRC this week.... Finally, First Republic Bank's membership in the S&P 500 Index could be in jeopardy after the troubled bank's stock set a new all-time low on Wednesday that briefly pushed its market capitalization below $1 billion.

https://www.zerohedge.com/markets/first-republic-shares-rise-reports-rescue-talks

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