The federal agency that guarantees bank deposits, ready to intervene in the First Republic after collapsing on the stock market

A branch of the First Republic Bank, this Friday in San Francisco (California). LOREN ELLIOTT (REUTERS)

The US federal agency in charge of guaranteeing bank deposits (FDIC, in its English acronym) could intervene this weekend in the regional bank First Republic to sell its assets to another entity, according to The Wall Street Journal this

.

The big banks JPMorgan Chase and PNC Financial Services are among those interested, the economic daily reported amid a wave of rumors about a rescue strategy.

The move would come hours after First Republic shares fell 43% on the New York Stock Exchange this Friday, to a price of $3.51, after being suspended several times during the session for excessive volatility.

The entity's valuation has plummeted, from more than 20,000 million dollars at the beginning of the year to 654 million yesterday.

Founded in 1985, with headquarters in San Francisco and branches primarily in California and high-net-worth urban areas on the East Coast, First Republic was the 14th-ranked bank in the nation by asset size as of end-2022. But its future hangs in the balance. thread since three US banks with a similar profile, concentrated in a certain customer base and geographic area, failed in a domino effect in early March.

This Friday, the Federal Reserve (Fed, US central bank) intoned the mea culpa for the lack of supervision over Silicon Valley Bank, the first to fall.

The authorities and other financial institutions came to the rescue of the First Republic to prevent it from suffering the same fate as Silicon Valley Bank and Signature Bank, which failed after the sudden and massive withdrawal of funds by their clients.

First Republic confirmed Monday that many of its clients have also withdrawn deposits, more than $100 billion in total in the first quarter.

The entity was left with a reserve of 30,000 million dollars that other banks deposited in its accounts, but it was not enough guarantee for investors, who sent shares falling on Tuesday.

The slide in shares continued on Wednesday and seemed to stop on Thursday, until the near-definitive collapse on Friday.

Among other strategic options such as partial asset sales, the most likely scenario facing First Republic Bank is an intervention before reselling them at a reduced price.

But, if it comes to fruition, it will be the third bailout of a bank in just two months, with the consequent overload for the authorities and on the eve of the Fed's May meeting. The risk of contagion for the banking sector, which has already weighed on the latest decision of the central bank will weigh again when considering the rate hike, which experts expect will be 25 basis points.

A less likely option, according to analysts, would be the purchase of certain assets by other banks without intervention by the authorities.

The difficulty is that most First Republic loans are fixed-rate mortgages, which have lost value with the recent rise in interest rates.

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