U.S. officials lead urgent rescue talks for First Republic -sources
NEW YORKÂ – .are coordinatingtoBank as private-sector efforts led by the bank’s advisers have yet to reach a deal, according to threefamiliar with the situation.
The Federal Deposit Insurance Corporation (FDIC), the Treasury Department and the Federal Reserve are among government bodies that have in recent days started to orchestrate meetings with financial companies about putting together a lifeline for the troubled lender, thesaid.
The government’s involvement is helping bring more parties, including banks and private equity firms, to the negotiating table, one of theadded.
It is unclear whether the. government is considering participating in a private-sectorof. The government’s engagement, however, has emboldenedexecutives as they scramble to put together a deal that would avoid a takeover by. regulators, one of thesaid.
became the epicenter of the. regional banking crisis in March after the wealthy clients it courted to fuel its breakneck growth started withdrawing deposits and left the bank reeling.
Thereqted anonymity because the discions are confidential.
“We are engaged in discions with multiple parties about our strategic options while continuing to serve our clients,”said in a statement.
The Treasury Department declined to comment; the FDIC and Federal Reserve did not immediately respond to emailed reqts for comment after ho.
Wall Street banks have been trying to find a solution forsince 11 of the biggest. lenders deposited $30 billion at the bank on March 16 to stanch a regional banking crisis that led to the failure of Silicon Valley Bank and Signature Bank.
Discions for a deal took on new urgency this week afterrevealed on Monday it had deposit outflows of more than $100 billion in thequarter. Although the bank said its deposits had stabilized, it disclosed it was losing money because it had to replace the withdrawn deposits with interest-bearing funding from the Federal Reserve.
.view a private-sector deal as preferable tofalling into FDIC receivership, two of thesaid.
But many of the options proposed – including selling assets or the creation of a “bad bank” that would isolate its underwater assets – have so far failed to yield a deal, theadded.
Any solution would have to come with coverage for the losses thator a potential acquirer of the bank would assume if there were a transaction. These losses would stem from‘s loan book and fixed-income portfolio, whose low-yielding assets would be marked down to account for a rise in interest rates.
is contemplating a major hit, and even a total loss for shareholders, as part of the options that would prevent. regulators from taking it over, one of thesaid.shares have lost 95 percent of their value since the regional banking crisis started on March 8.
No decision on a way forward has been made and no deal is certain, thesaid.
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