First Republic Bank (NYSE: FRC) jumps over 4.5% in pre trading session on Friday as US authorities are organizing urgent negotiations to save First Republic Bank, since private-sector efforts spearheaded by the bank’s advisors have yet to yield a result, according to three people familiar with the issue.
According to the sources, the Federal Deposit Insurance Corporation (FDIC), the Treasury Department, and the Federal Reserve are among the government entities that have recently begun to coordinate discussions with financial corporations about putting together a lifeline for the struggling lender.
According to one of the individuals, the government’s engagement is assisting in bringing additional parties, including banks and private equity groups, to the bargaining table.
It is unclear whether the United States government is exploring a private-sector bailout of First Republic. According to one of the insiders, the government’s involvement has encouraged First Republic officials as they hurry to put together a deal that would prevent a takeover by US authorities.
In March, First Republic became the core of the U.S. regional banking crisis when the rich clientele it courted to fuel its rapid development began withdrawing money, leaving the bank reeling.
Because the discussions are private, the sources requested anonymity.
“We are engaged in discussions with multiple parties about our strategic options while continuing to serve our clients,” stated First Republic in a statement.
The Treasury Department declined to comment, while the FDIC and Federal Reserve did not react promptly after hours to emailed requests for comment.
Wall Street banks have been attempting to find a solution for First Republic since March 16, when 11 of the country’s largest lenders placed $30 billion into the bank to halt a regional banking crisis that resulted in the failures of Silicon Valley Bank and Signature Bank.
Negotiations for a transaction gained traction this week after First Republic disclosed on Monday that it had more over $100 billion in deposit withdrawals in the first quarter. Despite claiming that its deposits had stabilized, the bank admitted that it was losing money because it had to replace the withdrawn deposits with interest-bearing funding from the Fed.
