A branch of First Republic Bank in Midtown Manhattan, New York, USA. Reuters Yonhap News
The Wall Street Journal (WSJ) reported on the 28th (local time) that major US banks such as JP Morgan and PNC Financial Services Group have jumped into a bid to take over First Republic Bank, which is on the verge of bankruptcy.
On this day, the news of the imminent intervention of the United States financial authorities in the First Republic Bank was reported, followed by the news of the bidding competition among major banks.
Citing sources, the WSJ said that JPMorgan and PNC are competing to participate in the takeover process following the federal government’s seizure of First Republic Bank. The closing and sale of the US Federal Deposit Insurance Corporation was expected to begin on the 29th or 30th at the earliest.
First Republic, a regional bank in San Francisco, was reeling amid rumors of a regional bank crisis that spread following the bankruptcy of Silicon Valley Bank (SVB) on the 10th of last month. The collapse of the GMB led to a “bank run” by panicked 1st Republic Bank customers, and the bank’s market capitalization fell by 97% over the past month.
Eleven major banks, including JPMorgan, began an emergency blood transfusion of $30 billion (about 40 trillion won) to First Republic last month, but the situation did not improve.
In particular, on the 24th, after the results of customer deposits plunged 40% ($ 72 billion) in the first quarter, the bank’s stock price fell by more than 60% in two days. Given that the bank received $30 billion in liquidity from JPMorgan and others right after the SVB crisis, the amount actually withdrawn from customers is more than $100 billion (about 134 trillion won).
The White House said in a briefing the day before that it continues to monitor the situation at First Republic Bank and is ready to intervene immediately if necessary.
Meanwhile, the Federal Reserve System (Fed), the US central bank, announced that the SVB crisis, which was a shock to the US financial sector, was the result of a combination of the Fed’s failure to supervise and poor management of the bank .
In its report on the results of its review of the GMB’s bankruptcy, the Fed officially acknowledged responsibility for the situation, arguing that the SVB’s poor management system, lax government supervision, and weak regulation caused the situation.
“The Fed failed to recognize the material seriousness of its governance, liquidity and interest rate risk management while GMB’s assets more than doubled between 2019 and 2022,” the report said.
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