US regulators are busy securing the sale of California bank First Republic, but two of the six banks concerned have now pulled out. First Republic is poised to become the third US lender to fail this year. “It takes longer than expected,” says FD journalist Lennart Zandbergen.
According to reports this weekend, a half-dozen US banks were in the running to buy out the stricken First Republic, with major bidders including JPMorgan Chase, Citizens Financial and PNC Financial Services. The Federal Deposit Insurance Corp (FDIC) is conducting the auction process and set a deadline late last week for prospective buyers to submit non-binding bids.
“It’s not easy to take over a bank”
Buyers were reportedly still reviewing First Republic assets on Sunday before making a final offer. This raised hopes that an agreement could be reached on Sunday evening, avoiding instability in Asian markets. But in the meantime there is still no white smoke and two banks have already gone bankrupt. “The question is whether it will still work before the European stock exchanges open,” says Zandbergen. “It’s not easy to take over a bank, there may be snakes in the grass.”
According to Zandbergen, the regulator faces a dilemma. First Republic has many wealthy clients and has had problems providing loans for the purchase of very expensive real estate. Saving the bank with public money is a tough sell. On the other hand, the government wants to prevent financial instability and people fear a domino effect. ‘That’s why the government has asked the banks to make an offer, but it’s urgent. Everyone knows what happened to Credit Suisse.”
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
