First Republic Hits Record Low, Likely Headed for FDIC Receivership

The Federal Deposit Insurance Corporation (FDIC) is exploring a way for First Republic to be sold to another US bank, which would involve taking the lender into receivership and having its assets transferred to the eventual buyer, according to CNBC.

The report noted that officials were still hopeful of a so-called ‘open markets’ solution, which would not involve a First Republic wind-down, but those prospects appeared to be fading into the weekend.

Purchasing the assets in a receivership situation gives buyers more leeway in terms of picking and choosing valuable assets, including loans and mortgages, while an ‘open market’ solution likely forces the buyer to pay above-market rates for the hundreds of millions in Treasury bonds sitting on First Republic’s balance sheet.

Meanwhile, Reuters reported that Federal Reserve and Treasury officials are working with the FDIC in an attempt to broker a financial lifeline for the bank, which saw deposits fall by more than $100 billion over the first three months of the year.

First Republic shares were down more than 50% at a new record low of $3.05.