# U.S. officials lead urgent rescue talks for First Republic -sources Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-04-28 Category: BANKING Category URL: https://financedigest.com/category/banking Meta Title: U.S. officials lead urgent talks to rescue First Republic Meta Description: U.S. officials are coordinating urgent talks to rescue First Republic Bank as private-sector efforts have yet to reach a deal. Government involvement seen as URL: https://financedigest.com/u-s-officials-lead-urgent-rescue-talks-for-first-republic-sourceshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-04-28t090346z2lynxmpej3r05nrtroptp4first-republic-bank-talks-1736814092361-compressed.jpg) # U.S. officials lead urgent rescue talks for First Republic -sources By Nupur Anand, Andrea Shalal and Greg Roumeliotis NEW YORK (Reuters) – U.S. officials are coordinating urgent talks to rescue First Republic Bank as private-sector efforts led by the bank’s advisers have yet to [reach a deal](https://www.financedigest.com/trump-reaches-375m-deal-to-sell-dc-hotel-wsj.html "Trump reaches 5M deal to sell DC hotel – WSJ"), according to three sources familiar with the situation. The Federal Deposit Insurance Corporation (FDIC), the Treasury Department and the Federal Reserve are among government bodies that have in recent days started to [orchestrate meetings with financial](https://www.financedigest.com/why-an-orchestrated-digital-identity-strategy-is-vital-for-financial-organisations-in-fighting-fraud.html "Why an orchestrated digital identity strategy is vital for financial organisations in fighting fraud") companies about putting together a lifeline for the troubled lender, the sources said. The government’s involvement is helping bring more parties, including banks and [private equity](https://www.financedigest.com/can-private-equity-do-for-africas-manufacturers-what-its-done-for-f1-and-rugby.html "Can private equity do for Africa’s manufacturers what it’s done for F1 and rugby?") firms, to the negotiating table, one of the sources added. It is unclear whether the U.S. government is considering participating in a private-sector rescue of First Republic. The government’s engagement, however, has emboldened First [Republic executives](https://www.financedigest.com/fiat-republic-the-specialist-baas-platform-that-bridges-web3-and-banks-announces-the-appointment-of-two-industry-experts-as-non-executive-directors-to-the-board-of-its-dutch-subsidiary.html "Fiat Republic, the specialist BaaS platform that bridges web3 and banks, announces the appointment of two industry experts as Non-Executive Directors to the board of its Dutch subsidiary.") as they scramble to put together a deal that would avoid a takeover by U.S. regulators, one of the sources said. First Republic became the epicenter of the U.S. regional banking crisis in March after the wealthy clients it courted to fuel its breakneck [growth](https://www.financedigest.com/getting-out-of-the-static-curve-to-decide-the-growth-of-umbilical-cord-blood-banking-market.html "Getting Out Of The Static Curve To Decide The Growth Of Umbilical Cord Blood Banking Market") started withdrawing deposits and left the bank reeling. The sources requested anonymity because the discussions are confidential. We are engaged in discussions with multiple parties about our [strategic options while continuing](https://www.financedigest.com/passendo-signs-new-strategic-partnerships-as-it-continues-growth-trajectory-entering-the-italian-and-german-markets.html "Passendo signs new strategic partnerships as it continues growth trajectory, entering the Italian and German markets") to serve our clients,” First Republic said in a statement. The Treasury Department declined to comment; the FDIC and Federal Reserve did not immediately respond to emailed requests for comment after hours. [Wall Street](https://www.financedigest.com/investors-eye-lower-wall-street-on-powell-nerves.html "Investors eye lower Wall Street on Powell nerves") banks have been trying to find a solution for First Republic since 11 of the biggest U.S. lenders deposited $30 [billion at the bank on March 16 to stanch a regional banking crisis that led to the failure of Silicon Valley Bank](https://www.financedigest.com/u-s-european-banks-could-lose-over-5-billion-from-risky-buyout-loans.html "U.S., European banks could lose over billion from risky buyout loans") and Signature Bank. Discussions for a deal took on new urgency this week after First Republic revealed on Monday it had deposit outflows of more than $100 [billion in the first quarter](https://www.financedigest.com/rheinmetall-wins-quarter-billion-euro-order-for-e-vehicle-parts.html "Rheinmetall wins quarter-billion euro order for e-vehicle parts"). Although the bank said its deposits had stabilized, it disclosed it was [losing money because it had to replace the withdrawn deposits with interest-bearing funding](https://www.financedigest.com/norways-wealth-fund-loses-174-billion-in-first-half-of-2022.html "Norway’s wealth fund loses 4 billion in first half of 2022") from the Federal Reserve. U.S. officials [view a private-sector deal as preferable to First Republic falling](https://www.financedigest.com/global-equities-waver-on-inflation-view-as-falling-oil-supplies-lift-prices.html "Global equities waver on inflation view as falling oil supplies lift prices") into FDIC receivership, two of the sources said. But many of the options proposed – including [selling assets](https://www.financedigest.com/uks-cineworld-to-not-sell-assets-individually-denies-talks-with-amc.html "UK’s Cineworld to not sell assets individually, denies talks with AMC") or the creation of a “bad bank” that would isolate its underwater assets – have so far failed to yield a deal, the sources added. Any solution would have to come with coverage for the losses that First Republic or a potential [acquirer of the bank](https://www.financedigest.com/can-banks-acquire-customers-with-biometric-payment-cards.html "Can banks acquire customers with biometric payment cards?") would assume if there were a transaction. These losses would stem from First Republic’s loan book and fixed-income portfolio, whose low-yielding assets would be marked down to account for a [rise in interest rates](https://www.financedigest.com/boes-pill-sees-need-for-further-interest-rate-rises.html "BoE’s Pill sees need for further interest rate rises"). First Republic is contemplating a major hit, and even a total loss for shareholders, as part of the options that would prevent U.S. regulators from taking it over, one of the sources said. First Republic [shares have lost 95% of their value since the regional banking](https://www.financedigest.com/banks-oil-majors-lift-british-shares-higher.html "Banks, oil majors lift British shares higher") crisis started on March 8. No decision on a way forward has been [made and no deal](https://www.financedigest.com/energy-efficiency-investments-made-easy-with-relaunch-of-the-green-deal.html "Energy efficiency investments made easy with relaunch of the Green Deal") is certain, the sources said. (Reporting by Andrea Shalal in Washington and Nupur Anand in New York; additional reporting by David French; editing by Lananh Nguyen, Megan Davies and Gerry Doyle) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---