Market Extra: First Republic seen drawing bids from JPMorgan and PNC amid report of ‘imminent’ FDIC seizure

United States

First Republic Bank FRC, -43.30% is said to be drawing bids from lenders JPMorgan Chase & Co. JPM, +0.87% and PNC Financial Services Group PNC, +1.74%, according to the Wall Street Journal late Friday night, citing people familiar with the matter.

The WSJ report follows another harrowing day for the San Francisco-based lender that has lost nearly all of its value so far this year after tumbling 43% on Friday, amid reports that the financial institution’s condition had deteriorated so substantially as to make a private-sector rescue untenable, with an outright government bailout of the lender seen as a nonstarter.

Reuters reported that a seizure of the San Francisco-based First Republic by regulators was “imminent,” and WSJ reported that a deal for all or parts of its assets would occur only after it was seized by the Federal Deposit Insurance Corporation.

Read: First Republic asset sales would pose ‘contained damage’ to residential mortgage bond market, says Goldman

Representatives of First Republic, the FDIC, JPMorgan and PNC either declined to comment or didn’t immediately respond to request for comment.

For weeks, the banking industry has been in a state of unease and First Republic has been a large part of that concern after lenders Silicon Valley Bank and Signature collapsed nearly two months ago.

A collective attempt to support First Republic back in March, including nearly a dozen lenders injecting some $ 30 billion in deposits, failed to stem concerns or anchor the bank’s shares.

First Republic’s first-quarter results earlier this week revealed that it had $ 104.5 billion of deposits in the first quarter, down by $ 72 billion over the prior three months. And that figure would have been worse without the deposit injection from the likes of lenders including JPMorgan.

See: Why First American Trust’s chief investment officer sees no quick end to regional-bank turmoil

First Republic also announced plans to cut its workforce by as much as 25% and shrink its balance sheet substantially to stabilize its business, implying that growth prospects for the bank could be hampered.

The bank’s shares closed at $ 3.51 on Friday and pointed to further declines in after-hours trading.

The broader market, however, appeared to shrug off First Republic worries.

The S&P 500 SPX, +0.83% and the Dow Jones Industrial Average DJIA, +0.80% advanced firmly while the Nasdaq Composite’s COMP, +0.69% daily rise helped it cap its highest close for the tech-heavy index since Sept. 12, 2022, according to Dow Jones Market Data.