US Regulator Ask Banks For Final Bids On First Republic• April 30, 2023 11:24 am • Comments
US regulators are now asking big banks like JPMorgan Chase and PNC for their final bids on First Republic Bank with a deadline of Sunday afternoon.
The goal of regulators is to find a new owner immediately in the hopes that this would calm the financial markets and concerns about the ongoing banking crisis.
This new incident represents the ongoing failure of multiple mid-sized banks starting with the collapse of Silicon valley Bank.
As a result, this has reduced confidence in the traditional banking system and has caused a recent surge in popularity for decentralized systems such as crypto.
It is unclear if there will be any more bank takeovers in the future, but some say that this is not over yet.
First Republic Bank $FRC will likely be seized by the FDIC tomorrow, making it the 3rd Bank to fail since March (and the 14th largest Bank)
Will there be more failures? I've worked in Banking 10 years so let me explain why this happened, what it means and how it impacts you:
— Andrew Lokenauth (@FluentInFinance) April 29, 2023
Regulators are expected to choose the bid that results in the smallest financial hit to the FDIC for resolving First Republic, according to a person with knowledge of the situation.
The SVB failure, by way of example, will cost the FDIC’s Deposit Insurance Fund roughly $20 billion, the agency said. The biggest banks will bear the brunt of that expense, because member banks will likely be assessed fees to replenish the FDIC fund over several years.
While the emergency takeovers of SVB and Signature both involved invoking a systemic risk exception to protect uninsured depositors from losses, that probably won’t be necessary in the First Republic receivership.
That’s because the new owner would presumably be able to handle deposit outflows; in the case of SVB’s receivership, it took two full weeks to announce a deal.
As it stands, it looks like the larger banks will continue to grow even larger which may concern some people as the number of banks within the US will likely decrease.
In terms of what this means for the crypto markets, it makes the value proposition much more attractive due to the fact that it is now riskier to store fiat within a bank account.
Of course, there is no realistic way to abandon fiat completely, but it encourages investors to at least look for ways to diversify their capital and crypto seems to be one easy solution.
As a result, prominent digital assets like BTC and XRP will likely stand to benefit from this global macroeconomic shift that is currently occurring.
“The banking system is stable”
The banking system:
– Silicon Valley Bank
– Silvergate Bank
– Signature Bank
– Credit Suisse
– First Republic Bank
All failed/collapsed in the last 60 days.
— Genevieve Roch-Decter, CFA (@GRDecter) April 29, 2023
The banking crisis has taken a heavy toll on financial institutions in the United States over this year, and Bitcoin appears to be on the winning side.
Earlier this week, First Republic said it was exploring strategic options following its disclosure of losing nearly $100 billion in deposits.
While analysts and investors seem to have already lost confidence in it, during the same period, Bitcoin gained a significant foothold near $30k.
With the declining confidence in the US banking system, as well as its counterparty in Europe, the interest in Bitcoin, which emerged during the previous massive crisis caused by banks, is on the rise.
JUST IN: A deal to acquire First Republic Bank, $FRC, is expected to be announced by tonight.
Current bidders include JP Morgan, Bank of America, US Bancorp, Citizens Financial, PNC and others.
The FDIC wants the deal to be announced before Asian markets open tonight.
— The Kobeissi Letter (@KobeissiLetter) April 30, 2023
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