First Republic Bank (FRC) exploring potential $100bn in asset sales - Bloomberg
Bloomberg reported Tuesday that sources have told them First Republic Bank (NYSE: FRC) is mulling divesting $50 billion to $100 billion of long-dated securities and mortgages as part of a larger plan to improve its financial situation.
The potential sales would help decrease the bank’s asset-liability mismatch, the outlet said people with knowledge of the matter told them, with possible buyers, including large banks in the US, potentially receiving warrants or preferred equity as a motivation to buy assets above their market value.
In addition, they stated that the lender is attempting to strengthen its financial position to avoid being seized by the Federal Deposit Insurance Corp. and potentially prepare for a capital raise.
Moreover, the sources told Bloomberg that it could require the US government to enable negotiations with some of the country’s largest banks to stabilize the lender as it aims to complete its turnaround.
First Republic shares are currently down more than 40% Tuesday after posting a bigger-than-expected decline in deposits in the first quarter. In addition, FRC said it is exploring strategic options.
By Sam Boughedda