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PNC, JPMorgan putting in 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) were among banks that submitted final bids for First Republic Bank (FRC.N) on Sunday in an auction by U.S. regulators, sources familiar with the matter said.

The Federal Deposit Insurance Corp had been expected to announce a deal on Sunday night, with the regulator likely to say at the same time that it had seized the lender, three sources previously told Reuters.

FDIC, Guggenheim, FRC and the banks declined to comment.

A deal for First Republic, which had total assets of $233 billion at the end of the first quarter, would come less than two months after Silicon Valley Bank and Signature Bank failed amid a deposit flight from U.S. lenders, forcing the Federal Reserve to step in with emergency measures to stabilize markets.

Those failures came after crypto-focused Silvergate voluntarily liquidated.

First Republic was the 14th biggest lender in the U.S. at the end of last year, larger than SVB, which was ranked 16th and Signature 29th, according to Fed data.

While markets have since calmed, a deal for First Republic would be closely watched for the amount of support the government needs to provide.

The FDIC officially insures deposits up to $250,000. But fearing further bank runs, regulators took the exceptional step of insuring all deposits at both Silicon Valley Bank and Signature.

For SVB and Signature, the FDIC created a ‘bridge bank’ to protect depositors.

It remains to be seen whether regulators would have to do so at First Republic as well. They would need approval by the Treasury secretary, the president and super-majorities of the boards of the Federal Reserve and the FDIC.

In trying to find a buyer before closing the bank, the FDIC is turning to some of the largest U.S. lenders. Large banks had been encouraged to bid for FRC’s assets, one of the sources said.

JPMorgan holds more than 10% of the nation’s total bank deposits.

Federal law prevents a large bank from an acquisition that would put it above a threshold of 10% of total deposits, but that could be waived by banking regulators if it was buying a failed bank, according to the 1994 law and interpretation of the document by a source who is expert on bank failures.


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