First Republic auction underway with JPMorgan, Citizens, PNC, and more banks bidding

US regulators are currently in the process of finalizing a sale of First Republic Bank, with roughly six banks reportedly bidding for the troubled lender. The auction process is being run by the Federal Deposit Insurance Corp (FDIC), with Citizens Financial Group, PNC Financial Services Group, and JPMorgan Chase among the bidders vying for the First Republic. 

The FDIC officially insures deposits up to $250,000, but regulators had previously insured all deposits at both Silicon Valley Bank and Signature Bank amid deposit flight from US lenders. The potential deal for First Republic Bank is expected to be closely monitored as the level of government support required would be of significant interest.

The interested banks are currently evaluating options and it is likely that lenders will bid for all of First Republic's deposits, a sizable chunk of its assets, and some of its liabilities. According to Reuters, the announcement of the deal is likely to take place on Sunday night before the opening of Asian markets. At the same time, the regulator is expected to confirm that it has seized First Republic Bank.

Eugene Flood, president of A Cappella Partners, who serves as an independent director at First Citizens BancShares and Janus Henderson, said that "For a large bank to buy all or most of the bank could be healthier for First Republic customers because it could put them on a broader and more stable platform."

James "Jim" Herbert founded First Republic Bank in 1985, and the bank was later acquired by Merrill Lynch in 2007. Following the 2008 financial crisis, Merrill Lynch sold the bank, which was then listed on the stock market again in 2010.

The San Francisco-based lender saw more than $100 billion in deposits fleeing in the first quarter of this year, leaving it scrambling to raise money. Despite an initial $30 billion lifeline from 11 Wall Street banks in March 2023, the efforts proved futile, in part because buyers baulked at the prospect of having to realise large losses on its loan book. 

First Republic Bank's market value reached a low of $557 million by Friday this week, plummeting from its peak of $40 billion in November 2021.

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