The government is attempting to allay fears of a growing crisis
© AFP / Patrick T. Fallon / AFP
US officials are making urgent efforts to rescue the struggling First Republic Bank, as attempts by private-sector companies have thus far failed, Reuters reported on Friday, citing sources.
People familiar with the matter told the outlet that the Federal Deposit Insurance Corporation (FDIC), Treasury Department, and Federal Reserve have arranged meetings with financial firms in recent days in an effort to hand the distressed lender a lifeline.
Sources claimed that the step could pave the way for more parties, including banks and private equity companies, to become involved. However, they added it was unclear if the government was considering participating in a private-sector rescue of First Republic. They also highlighted that US officials view a private-sector deal as preferable, rather than First Republic falling into FDIC receivership.
“We are engaged in discussions with multiple parties about our strategic options while continuing to serve our clients,” First Republic stated.
A dramatic sell-off has wiped out 75% of the bank’s stock value this week, following the disclosure on Monday that it had lost more than $100 billion of deposits in the first quarter of the year. The San Francisco-based lender has struggled to stay afloat since the US banking sector was hit by a major crisis stemming from the collapses of Silicon Valley Bank and Signature Bank in March.
Silicon Valley Bank, a significant player serving the tech and startup sectors, was shut down by regulators last month shortly after California-based, crypto-focused Silvergate liquidated its bank. New York-based Signature Bank was also closed down by regulators due to liquidity concerns.
READ MORE: US banking crisis fears mount as major lender struggles
To help First Republic avoid the same fate, leading US financial institutions agreed last month on a $30 billion injection into the troubled regional lender. Efforts to inspire confidence in the banking system thus far appear to have failed, however. Shares of First Republic are down 97% this year.
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