Regulators in the US have requested banks to submit their top and final takeover proposals for First Republic by Sunday evening. This action aims to stabilize the market and end a period of uncertainty for regional banks. Sources familiar with the matter have stated that JPMorgan Chase and PNC are expected to bid for the struggling lender. The winning bank would acquire First Republic through receivership.
Bank of America, along with other institutions, are considering making an offer for First Republic. If regulators, headed by the FDIC, receive a satisfactory bid by Sunday, it could result in the announcement of a new owner of First Republic early on Monday. Such a scenario would minimize any disruptions for First Republic customers, who would begin the week assured that their bank is now owned by a financially-sound operator.
Why it matters
The auction of First Republic could bring a conclusion to a turbulent time for medium-sized banks in the US. After the collapse of Silicon Valley Bank in March, First Republic has been viewed as the weakest link in the American banking system. Following a 90% decline in its stock price last month and further losses this week, the auction may result in one of the largest US banks expanding further and taking advantage of a government-led receivership process that leaves the FDIC with unwanted assets.