US regulators are racing to find a savior to buy First Republic Bank in a deal that could be announced as early as Sunday.
The Federal Deposit Insurance Corporation reportedly asked six banks to bid for the beleaguered lender.
Shares in First Republic fell last week after it admitted that customers had pulled out $100 billion in deposits in March.
At the time, a rival Silicon Valley bank collapsed, sparking fears of a broader banking crisis.
The failure of SVB was quickly followed by the demise of another US lender, Signature Bank.
According to reports, the Federal Deposit Insurance Corporation (FDIC), a US financial regulator, sought bids for First Republic by the end of last week and was evaluating them over the weekend.
Reuters news agency reports that JPMorgan Chase, the investment banking giant, is believed to be one of the banks invited to bid for the First Republic. It is also understood that Bank of America has been contacted.
JPMorgan declined to comment.
The FDIC and Bank of America have been contacted for comment.
Concerns about the global banking industry grew last month as problems emerged at the Silicon Valley bank.
Central banks around the world have raised interest rates sharply over the past year to curb the rate hike, otherwise known as inflation.
It hurt the values of the large portfolios of bonds that banks bought when interest rates were low, sparking fears that other companies faced similar situations.
Meanwhile in Europe, Swiss banking giant Credit Suisse – which has been mired in its own problems for a number of years – said it would have to borrow $54 billion from the country’s central bank to shore up its finances.
Credit Suisse has since been bailed out by longtime rival UBS.
Like Silicon Valley Bank, First Republic is a medium-sized US lender. In March, a group of 11 US banks stepped forward to inject $30 billion into First Republic in an effort to stabilize the business. Among them was JPMorgan.
However, investors in the bank were alarmed last week when First Republic disclosed how much depositors withdrew from the bank in March.
First Republic counts wealthy individuals among its clients whose money would likely be at risk if a buyer could not be found. In the United States, the Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000.
When Silicon Valley and Signature Bank collapsed, the FDIC stepped in to say it would insure all deposits to prevent a rush of people trying to get their money out, known as a bank run.
If you can’t find a buyer for First Republic, the FDIC can take similar action.
“Infuriatingly humble alcohol fanatic. Unapologetic beer practitioner. Analyst.”