It appears as though the clock ran out on First Republic Bank.
Reuters, citing sources, reports that the US Federal Deposit Insurance Corporation is preparing to place the struggling bank under receivership "imminently".
It's no surprise as reports on Friday suggested that time was running out and that no private sector-led rescue was coming. Various reports said there were banks who were prepared to buy and run FRC within the FDIC resolution mechanism.
Shares of the company fell 43% on Friday and have tumbled precipitously this week to $3.51 from $16 at the start of week. This week's breakdown was precipitated by a report from the bank that showed $100B of $176B in consumer deposits fleeing, which was worse than analysts had expected.
Equity holders are highly likely to be wiped out as the FDIC takes over but depositors will be made whole.
For the broader market, this is unlikely to be a meaningful event. Other regional banks reported much smaller drawdowns in deposits and shares held relatively steady through the latest storm. If anything, I suspect the resolution will help to put the episode in the rearview mirror and put the focus back on economic data .
Update: The WSJ now reports that JPMorgan and PNC have bid to take over First Republic after the FDIC seizes the bank.
