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- The US government is reportedly preparing to take control of First Republic Bank, according to Fox News.
- While an official seizure has not yet been mandated, it appears likely according to Gasparino.
First Republic Bank (FRC) now faces a potential downfall similar to that of Silvergate and Signature Bank, which collapsed late last month, as it has limited options for recovery. This could soon mark the third major bank to fail this year, inciting widespread concern across the United States and internationally. The bank announced today that it had experienced a loss of deposits amounting to approximately $100 billion amid the ongoing financial turmoil that began last month.
The US government is reportedly set to take control of First Republic Bank, as indicated by a report from Fox Business Network. Fox reporter Charles Gasparino cites bankers currently engaged with First Republic, who express expectations of a government receivership for the struggling bank in the near future.
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SCOOP (1/2): Bankers working with @firstrepublic bank indicate they foresee eventual government receivership for the distressed bank after it depletes private sector options such as asset sales and securing a buyer, both of which seem challenging. Officials at the major banks believed the Feds were
— Charles Gasparino (@CGasparino) April 25, 2023
This action will only occur if the bank fails to secure a buyer or sell its assets through private channels, both of which “appear difficult.” Over 40%, or roughly $72 billion, was withdrawn from First Republic’s accounts in the first quarter of this year. As of Tuesday’s market close, its stock price had nearly halved. The bank made this announcement on Monday.
Crypto Market Rallies
Since the shutdown of Silicon Valley Bank in March, First Republic’s situation has deteriorated to unprecedented lows over the past month and a half. Several large banks are also facing difficulties, but it seems that First Republic may soon be under US government control.
Gasparino asserts that while an official seizure has not been declared, it is quite likely at this stage. As of yesterday, shareholders are also pursuing legal action against First Republic, alleging that the bank is concealing the impact of rising interest rates on its business models, which includes a loss of depositors. The crypto market has reacted positively to the news of the banking crisis, with Bitcoin rising 5% and trading at $28,675 according to CMC.
