PNC And JPMorgan Submit Final Bids For First Republic Bank In FDIC auction

PNC Financial Services Group (PNC.N), JPMorgan Chase & Co (JPM.N), and Citizens Financial Group Inc (CFG.N) have submitted their final bids for First Republic Bank (FRC.N) in an auction organized by U.S. regulators. The Federal Deposit Insurance Corp was anticipated to announce the sale of the bank on Sunday evening, along with its decision to seize the institution, as reported earlier by three sources to Reuters.

The process continued until Sunday evening and the regulators had made repeated requests for revisions to bids and further refinement of specific criteria related to the assets being bid. The source also mentioned a growing sense that a decision was on the horizon, according to a source familiar with the matter.

It was reported over the weekend that roughly six banks were bidding to purchase First Republic, as U.S. regulators worked to secure the sale. This marks the third major U.S. bank to face failure in just two months, amid a deposit flight from lenders, which forced the Federal Reserve to intervene with emergency measures to stabilize markets. Guggenheim Securities is advising the Federal Deposit Insurance Corporation (FDIC), according to two sources familiar with the matter, although the FDIC was not available for comment. All parties, including Guggenheim, First Republic, and the bidding banks, have declined to comment on the matter.

The potential acquisition of First Republic is of significant interest as it would indicate the level of government intervention required. Although the FDIC guarantees deposits up to $250,000, regulators chose to insure all deposits at Silicon Valley Bank and Signature to prevent bank runs. It is uncertain if similar measures would be necessary for First Republic, which would require approval from the Treasury Secretary, the President, and a super-majority of the boards of the Federal Reserve and FDIC. To avoid closing the bank, the FDIC is seeking bids from some of the largest US lenders for the purchase of First Republic's assets. According to one source, larger banks were encouraged to bid on FRC's assets. Despite initial turbulence, the markets have stabilized.

JPMorgan holds more than 10% of the total bank deposits in the country. According to the text of the 1994 law and an interpretation of the document by a source with knowledge of bank failures, a large bank is prohibited by federal law from an acquisition that would push it above a threshold of 10% of all deposits, but that could be waived by banking regulators in the event it was purchasing a failed bank.