Multiple banks submitted final bids last night to buy San Francisco based lender First Republic Bank in an auction by us regulators.
The Federal Deposit Insurance Corporation, or FDIC, asked up to six banks, including JP Morgan Chase co., PNC Financial Services Group in.., and Bank of America to place bids after gauging interest late last week. Shares of First Republic plummeted last week following news that customers had withdrawn $102 billion since last month, as it grappled with holding fixed rate mortgages with low interest rates.
First Republic is mostly in the business of lending to homeowners, and for the most part, to individuals with very high credit scores. Almost 60 percent of its loans were single-family mortgages. In March, 11 banks, including JP Morgan, deposited $30 billion into First Republic to shore up its finances. Following the drop in stock price, the company’s market value has fallen to $650 million.
The agreement was reached and announced before US stock markets opened this morning.
