Shares of First Republic (NYSE:FRC) deepened losses, down 50% in after-hours trading Friday, after Reuters reported that the troubled bank would be placed under control of the US Federal Deposit Insurance Corporation (FDIC).
According to people familiar with the matter, the US regulator believes the FRC's financial situation has deteriorated to the point where there is no time to pursue a private bailout.
If confirmed, the First Republic would join the notorious list of US banks that have collapsed over the past few months, such as Silicon Valley and Signature Bank.
FRC is down more than 75% this week, after a disappointing quarterly report showing the bank lost $100 billion in deposits, as well as a rumor from CNBC that the bank is heading for bankruptcy and the FDIC.
The shares are down over 97% since the start of the year, and are now trading around $1.80.
It was reported that JP Morgan (NYSE:JPM) wanted to buy the troubled bank, but only after the Deposit Insurance Authority confirmed that it would guarantee the deposits of the bank's customers.
The authority asked JPMorgan Bank and PNC Financial Services Group (NYSE:PNC) to submit final purchase offers before next Sunday.
Bloomberg reported that the FDIC reached out to JPMorgan and PNC on Thursday to see if there is interest from the two institutions to buy, and to put together a suggested price and estimated cost for the insurance financing that the agency should set up.
