First Republic Bank, a San Francisco-based lender, has been struggling financially for some time now. According to a recent Reuters report, U.S. officials are now leading urgent talks to rescue the bank. The government is engaging with financial companies to put together a lifeline for the troubled lender. However, no decision has been made, and no deal is certain at this point.
Government Intervention
The Federal Deposit Insurance Corporation (FDIC), the Treasury Department, and the Federal Reserve are among the government bodies that have recently started to conduct meetings with financial companies about putting together a lifeline for the troubled lender. The government’s engagement has “emboldened First Republic executives” who are working to put together a deal that would avoid a takeover by U.S. regulators.
The private-sector efforts have not been successful in pocketing a finalized deal, leading the government to intervene. U.S. officials consider a private-sector deal “preferable” to First Republic falling into FDIC receivership. Many options, including selling assets and creating a “bad bank,” have been put forth on the table. However, the sources revealed that none of them have been able to lead into a deal.
Share Price and Market Performance
Despite the news of government intervention, First Republic’s share price rose by 8.79% on Thursday. However, it hardly made a difference on the monthly. It closed yesterday’s closing session at $6.19, significantly down from its November 2022 peak of $222.8. This indicates that investors are not confident about the bank’s future and are still waiting for a concrete solution.
The First Republic has been struggling to find a buyer and sell its assets, both of which appear difficult. According to Fox News’ Charles Gasparino, bankers working with First Republic expect eventual government receivership for the ailing bank. This will come after it exhausts private sector solutions. The sources cited by Reuters also revealed that no decision has been made, and no deal is certain at this point.
