The last time we checked on the status of the recent banking crisis, a mixture of bank sales and federal assistance staved off an escalation of the troubles.
Now Federal regulators are holding an auction for First Republic.
Federal regulators are holding an auction for ailing regional bank First Republic, a person familiar with the matter tells CNN.Final bids are due for First Republic Bank at 4 p.m. ET on Sunday, the source said.The Federal Deposit Insurance Corporation [FDIC], the independent government agency that insures deposits for bank customers, is running the auction.. . . . A decision on a First Republic buyer would seem likely to be announced later Sunday evening. During times of market stress, government officials typically try to announce solutions before global markets start trading. Some Asian markets are scheduled to begin trading at 8 p.m. ET Sunday.Shares of First Republic (FRC) plunged from $122.50 on March 1 to around $3 a share as of Friday on expectations that the FDIC would step in by end of day and take control of the San Francisco-based bank, its deposits and assets. But that never happened.The FDIC had already done so with two other similar sized banks just last month — Silicon Valley Bank and Signature Bank — when runs on those banks by their customers left the lenders unable to cover customers’ demands for withdrawals.
At the time of this report, several large banking institutions had put in a bid.
PNC Financial Services Group (PNC.N) and JPMorgan Chase & Co (JPM.N) were among banks set to submit final bids for First Republic Bank (FRC.N) by midday Sunday in an auction being run by U.S. regulators, sources familiar with the matter said.The Federal Deposit Insurance Corp is expected to announce a deal on Sunday night before Asian markets open, with the regulator likely to say at the same time that it had seized the lender, three sources previously told Reuters….Citizens Financial Group Inc (CFG.N) was another bidder vying for the bank, according to sources familiar with the matter on Saturday.FDIC was not immediately available for comment. Guggenheim, FRC and the banks declined to comment.
There is a new report on Silicon Valley Bank, the first bank that was poised for collapse last month, blaming the troubles on “a combination of extremely poor bank management, weakened regulations, and lax government supervision.”
The report takes a critical look at what the Fed missed as Silicon Valley Bank grew quickly in size in the years leading up to its collapse. The report also points out underlying cultural issues at the Fed, where supervisors were unwilling to be hard on bank management when they saw growing problems.The report, authored by Federal Reserve staff and Michael Barr, the Fed’s vice chair for supervision, comes amid ongoing concerns about the strength of regional banks. Earlier this week, First Republic Bank’s stock tumbled after investors were spooked by the bank’s disclosure on Monday that depositors withdrew more than $100 billion during last month’s crisis, raising concerns about First Republic’s stability.Silicon Valley Bank was seized by regulators on March 10 after customers withdrew billions of deposits within a matter of hours in a classic bank run, which was hastened by the swiftness of mobile banking. The new report from the Fed singled out the central bank for criticism, saying the institution “did not appreciate the seriousness of critical deficiencies in the firm’s governance, liquidity, and interest rate risk management.”
Finally, the FDIC also concluded the collapse of Signature Bank, the third troubled institution was due to “poor management.”
Bank management “did not always heed FDIC examiner concerns, and was not always responsive or timely in addressing FDIC supervisory recommendations,” the report said.Contagion effects from Silicon Valley Bank’s failure and Silvergate Bank’s self-liquidation, which occurred just days before Signature Bank was forced to close, helped ignite the run on deposits, the FDIC report stated. But the FDIC said that was not the root cause of Signature Bank’s failures.In particular, bank management did not fully understand the risks associated with accepting crypto deposits, which comprised more than 20% of its total deposits, the FDIC report said.“When that industry started to turn and interest rates started to rise, those deposits started leaving the bank,” Marshall Gentry, chief risk officer at the FDIC, said on a call with reporters Friday. “Even though they were crypto cash deposits, it was a traditional kind of bank run.”
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