MOSCOW, 26 Apr. American bank First Republic will try to persuade other industry participants to purchase part of its assets above the market price to save the enterprise itself and improve the banking sector , according to CNBC, citing sources.
Earlier, First Republic Bank said in a filing that it lost more than $100 billion in deposits in the first quarter of this year, while receiving an additional $30 billion in total deposits from US banking giants, including Bank of America, Citigroup, JPMorgan Chase and Wells Fargo. Against this backdrop, Bloomberg reported that the bank is considering selling its assets worth up to $100 billion.
«First Republic consultants will try to persuade the big US banks, which have already backed him, to provide another favor,» the source said. «According to bankers familiar with the situation, the offer would go something like this: buy bonds from First Republic at above-market rates for a total loss of several billion dollars — or face roughly $30 billion in Federal Deposit Insurance Corporation (FDIC) payouts when The First Republic will collapse,» CNBC clarifies.
According to sources, the bank believes that the purchase of its assets at an inflated price will be the right step towards the improvement of the banking system, as well as its own well-being. In addition, First Republic consultants are confident that if one of the banks takes such a step, it will contribute to the possibility of its recapitalization. According to sources, the consultants have already compiled a list of potential buyers of the bank's new shares.
However, according to the TV channel, a controversial point is that First Republic consultants rely on the mediation of the US government to convene the heads of the country's banks to discuss possible solutions. At the same time, according to a CNBC source, the government last weekend already turned to one of the largest US banks with a request to be ready for action on the situation with the First Republic, but nothing followed.
A Politico source later said he didn't expect anyone to buy First Republic's assets without serious guarantees from the government.
According to First Republic advisers, the company will lose $ 27 billion in the event of a possible transition to state control due to the write-down of the entire portfolio of the bank.