Regulators had indicated they would announce the winner by 8pm before Asian markets open. PNC executives spent much of the weekend preparing for the bid at the bank’s Pittsburgh headquarters. Based in Providence, Rhode Island, Citizens executives gathered at offices in Connecticut and Massachusetts.
However, after 8:00 pm, I did not hear anything from the FDIC. Several hours of silence followed.
For the three smaller banks, the deal would have been game-changing and would have given them a larger presence in affluent locations such as the San Francisco Bay Area and New York City. His PNC, the sixth-largest bank in the United States, would have strengthened its position to challenge his four major commercial financial institutions: JP Morgan, Bank of America, Citigroup and Wells Fargo.
In the end, JP Morgan not only provided more money than others, but also agreed to buy most of the bank, two people familiar with the process said. Regulators were also more likely to accept bank proposals. That’s because JP Morgan will likely be easier to manage by integrating First Republic branches into its business and owning or selling smaller bank loans and mortgages, the two said. official said.
Dimon and his team were seeking assurances that the government would protect JP Morgan from loss while executives at smaller banks waited for their phones to ring, one of the people said. continued negotiations with
Around 3:00 am, the FDIC announced that JP Morgan would buy First Republic.
An FDIC spokesman declined to comment on other bidders. “First Republic Bank’s resolution included a highly competitive bidding process resulting in a transaction consistent with minimum cost requirements of the Federal Deposit Insurance Act,” the agency said in a statement. says.
The announcement was widely acclaimed in the financial industry. “It felt like the clouds had lifted,” Robin Vince, president and chief executive of Bank of New York Mellon, said in an interview.
Some financial analysts have warned that the celebration may be overkill.
Many banks still have hundreds of billions of dollars in unrealized losses on government bonds and mortgage-backed securities they bought when interest rates were very low. Some of these bond investments are now much less valuable as the Federal Reserve has raised interest rates significantly to keep inflation in check.
