Trading/Investing Thread - Page 132

The Federal Deposit Insurance Corporation on Monday decided to break up Silicon Valley Bank (SVB) and hold two separate auctions for its traditional deposits unit and its private bank after failing to find a buyer for the failed lender last week.

It will seek bids for Silicon Valley Private Bank until March 22 and for the bridge bank until March 24. The private bank, which is housed within SVB's retail operations, caters to high net-worth individuals.

Bank and non-bank financial firms will be allowed to bid on the asset portfolios, the regulator said.

First Citizens BancShares Inc (FCNCA.O), one of the biggest buyers of failed U.S. lenders, has submitted a bid for all of Silicon Valley Bank, one source with knowledge of the matter said. If the FDIC decides to receive bids for parts of SVB, First Citizens also expects to bid. Bloomberg reported earlier on their interest on SVB.

First Citizens said in a statement it "does not comment on market rumors or speculation."

Last week, sources told Reuters that the FDIC was planning to relaunch the sale process for SVB, with the regulator seeking a potential break-up of the failed lender.

The parent company of the lender SVB Financial Group had on Friday filed for a reorganization under Chapter 11 bankruptcy protection and sought buyers for its assets after steps to shore up investor confidence failed.

The FDIC, which insures deposits and manages receiverships, had informed banks mulling offers in the auctions for SVB and Signature Bank (SBNY.O) that it was considering retaining some of the assets that are underwater.

Reuters reported on Sunday that the efforts of some U.S. regional banks to raise capital and allay fears about their health are running up against concerns from potential buyers and investors about looming losses in their assets.

The run on the bank was sparked by balance-sheet concerns after the lender sold a portfolio of treasuries and mortgage-backed securities to Goldman Sachs (GS.N) at a $1.8 billion loss and then attempted to plug that hole through a $2.25 billion fundraising.

On March 23 2023 03:18 mahrgell wrote:
May I ask how posting the stock prize changes from 9 days ago helps that statement?

On March 23 2023 07:20 SC-Shield wrote:


You ask a guy that thinks Fed rising interest rate means recession if done multiple times in a row. :D

On a different topic, it's good that Fed raised rates. I would have been more scared for my US stocks if they didn't. Market seems volatile, possibly because Fed signals they won't do any interest rate cuts this year but that's probably good too. Repeat of 1981 is in no one's interest, reducing rates too quickly.

April 26 (Reuters) - First Republic Bank's (FRC.N) market value plunged below $1 billion for the first time ever on Wednesday after a report said the U.S. government was unwilling to intervene in the rescue process, hammering the lender's stock.

After a brutal selloff, the bank's market capitalization was about $886 million at its lowest on Wednesday, a far cry from its peak of more than $40 billion in November 2021.

U.S. government officials are currently unwilling to intervene in the First Republic rescue process, CNBC reported, citing sources.

The bank has been looking at several options, such as selling assets or the creation of a "bad bank", a source familiar with the matter told Reuters on Tuesday.

The bad bank possibility is a crisis-type method of isolating financial assets that have problems.

Trading in First Republic's shares were halted multiple times. The stock was last down nearly 30% at $5.66.

WeWork crawled into 2023 so loaded with debt that it has yet to find its footing or future. Last month, it struck deals to restructure debt, cutting obligations by about $1.5 billion, and extending the due dates of other notes in an attempt to preserve cash, Reuters reported. This after it closed 40 locations in late 2022.

When a $47 billion startup shrivels so drastically, who gets hurt? The investors. In this case, Softbank has suffered the most by far. Its Vision Fund is still the largest shareholder of WeWork with over 461.5 million shares, or about 62% of the company. Softbank has been in a world of hurt over WeWork — and other missteps — for years now.

April 29 (Reuters) - The U.S. Federal Deposit Insurance Corp has asked banks including JPMorgan Chase & Co (JPM.N) and PNC Financial Services Group (PNC.N) to submit final bids for First Republic Bank (FRC.N) by Sunday after gauging their initial interest earlier in the week, Bloomberg News reported.

The banking regulator reached out to banks late on Thursday seeking indications of interest, including a proposed price and estimated cost to the agency's deposit insurance fund, the report said.

Bank of America (BAC.N) is among several other institutions weighing a potential bid for First Republic, CNBC reported on Saturday, citing people with knowledge of the matter.

Based on those submissions on Friday, the FDIC invited at least two companies to the next step in the bidding, the Bloomberg report added, citing people familiar with the matter.

The FDIC said in an email: "We would not comment on or confirm whether we are bidding an open institution."

PNC Financial declined to comment on the Bloomberg report. JPMorgan and Bank of America did not immediately respond to a voicemail and email seeking comment.

The FDIC is preparing to place First Republic under receivership imminently, after the regulator decided the regional lender's position had deteriorated and there was not time to pursue a rescue through the private sector.

If the San Francisco-based lender falls into receivership, it would be the third U.S. bank to collapse since March, following the collapse of Silicon Valley Bank and Signature Bank.

NEW YORK (AP) — Regulators seized troubled First Republic Bank early Monday and sold all of its deposits and most of its assets to JPMorgan Chase Bank in a bid to head off further banking turmoil in the U.S.

San Francisco-based First Republic is the third midsize bank to fail in two months. It is the second-biggest bank failure in U.S. history, behind only Washington Mutual, which collapsed at the height of the 2008 financial crisis and was also taken over by JPMorgan.

First Republic has struggled since the March collapses of Silicon Valley Bank and Signature Bank and investors and depositors had grown increasingly worried it might not survive because of its high amount of uninsured deposits and exposure to low interest rate loans.

The Federal Deposit Insurance Corporation said early Monday that First Republic Bank’s 84 branches in eight states will reopen as branches of JPMorgan Chase Bank and depositors will have full access to all of their deposits.

Regulators worked through the weekend to find a way forward before U.S. stock markets opened. Markets in many parts of the world were closed for May 1 holidays Monday. The two markets in Asia that were open, in Tokyo and Sydney, rose.

“Our government invited us and others to step up, and we did,” said Jamie Dimon, chairman and CEO of JPMorgan Chase.

As of April 13, First Republic had approximately $229 billion in total assets and $104 billion in total deposits, the FDIC said.

At the end of last year, the Federal Reserve ranked it 14th in size among U.S. commercial banks. The FDIC estimated its deposit insurance fund would take a $13 billion hit from taking First Republic into receivership. Its rescue of Silicon Valley Bank cost the fund a record $20 billion.

Before Silicon Valley Bank failed, First Republic had a banking franchise that was the envy of most of the industry. Its clients — mostly the rich and powerful — rarely defaulted on their loans. The bank has made much of its money making low-cost loans to the wealthy, which reportedly included Meta Platforms CEO Mark Zuckerberg.

Flush with deposits from the well-heeled, First Republic saw total assets more than double from $102 billion at the end of 2019’s first quarter, when its full-time workforce was 4,600.

But the vast majority of its deposits, like those in Silicon Valley and Signature Bank, were uninsured — that is, above the $250,000 limit set by the FDIC. And that worried analysts and investors. If First Republic were to fail, its depositors might not get all their money back.

Those fears were crystalized in the bank’s recent quarterly results. First Republic experienced a modern day bank run as customers rushed to pull out more than $100 billion in deposits following the failure of Silicon Valley and Signature Bank. Unlike bank runs throughout history, First Republic’s demise was fueled by the speed of social media and digital withdrawals that can be made in seconds from a cell phone.

San Francisco-based First Republic said that it was only able to stanch the bleeding after a group of large banks stepped in to save it with $30 billion in uninsured deposits.

First Republic had been looking for a way to quickly turn itself around. The bank planned to sell off unprofitable assets, including the low interest mortgages that it provided to wealthy clients. It also announced plans to lay off up to a quarter of its workforce, which totaled about 7,200 employees in late 2022.

Investors were skeptical, and the devastating quarterly report sent them running for the exits. First Republic shares fell 75% last week and closed Friday at $3.51. Any remaining shareholders are likely to get wiped out. The shares traded at $115 on March 8, right before Silicon Valley Bank failed.

The Fed and FDIC, which regulate the banking industry along with the Office of Comptroller of the Currency, could face renewed criticism over their handling of First Republic. Both acknowledged Friday in separate reports that lax supervision had contributed to the failures of Silicon Valley Bank and Signature Bank.

For Dimon and JPMorgan, there may be a sense of déjà vu: Back in 2008, Dimon was the go-to banker for Washington to find private solutions for that banking crisis and JPMorgan acquired both Bear Stearns and Washington Mutual.

In a statement, JPMorgan portrayed the First Republic deal as beneficial both to the financial system and the company. As part of the agreement, the FDIC will share losses with JPMorgan on First Republic’s loans. JPMorgan expects the addition of First Republic to add $500 million to its net income per year, although it expects to incur $2 billion in costs integrating First Republic into its operations over the next 18 months.