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Regulators auction First Republic, with deal expected by Sunday

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A deal is expected to be announced on Sunday night before Asian markets open, with the regulator likely to say at the same time that it had seized the lender, three of the sources said

Currently, the interested banks are evaluating options to see what they would like to bid for, one of the sources said, adding that it is likely that lenders will bid for all of FRC’s deposits, a sizable chunk of its assets and some of its liabilities.

While markets have since calmed, a deal for First Republic would be closely watched for the amount of support the government has to provide. In trying to find a buyer before closing the bank, the FDIC is turning to some of the largest U.S. lenders. Large banks had been encouraged to bid for FRC’s assets, one of the sources said.

First Republic was founded in 1985 by James “Jim” Herbert, son of a community banker in Ohio. Merrill Lynch acquired the bank in 2007, but it was listed in the stock market again in 2010 after being sold by Merrill’s new owner, Bank of America Corp, following the 2008 financial crisis. Despite an initial $30 billion lifeline from 11 Wall Street banks in March, the efforts proved futile, in part because buyers balked at the prospect of having to realize large losses on its loan book.

 

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