US authorities are considering expanding an emergency lending facility for banks in ways that would give First Republic Bank more time to shore up its balance sheet, people with knowledge of the situation said.
Officials have yet to decide on what support they could provide First Republic, if any, and an expansion of the US Federal Reserve’s offering is one of several options being weighed at this early stage.
Regulators continue to grapple with two other failed lenders — Silicon Valley Bank and Signature Bank — that require more immediate attention.
Photo: AFP
Even short of that step, watchdogs see First Republic as stable enough to operate without any immediate intervention as the company and its advisers try to work out a deal to shore up its balance sheet, the people said, asking not to be named discussing confidential talks.
First Republic’s stock has plunged more than 90 percent this month amid concerns that the San Francisco-based lender could fall victim to the same forces that recently caused a trio of US banks to collapse.
However, while those banks toppled when rapid customer withdrawals forced them to lock in losses on depreciated assets, First Republic has remained open and independent.
US officials have been keeping close tabs on the firm’s health and progress — aiming to stay vigilant in case the situation unexpectedly changes.
Behind the scenes, they have concluded the bank’s deposits are stabilizing and that it is not susceptible to the kind of sudden, severe run that prompted regulators to seize Silicon Valley Bank within just a few days, the people said.
Though First Republic has structural problems with its balance sheet, it has cash to meet client needs while it explores solutions, the people said.
That includes US$30 billion deposited by the nation’s largest banks this month.
A potential adjustment to the Fed’s emergency lending program announced on March 13 is among options authorities have weighed in recent days, people with knowledge of the deliberations said.
Any expansion of the Fed’s liquidity offerings would apply to all eligible users, in keeping with banking law that says remedies must be broadly based, rather than aimed at helping a particular bank.
However, the change could be made in a way to ensure that First Republic benefits, the people said.
The banking crunch was exacerbated by troubles at Credit Suisse Group AG, leading the Swiss government to broker a deal for its takeover by longtime rival UBS Group AG.
Markets were gripped by fresh volatility on Friday with the focus on Deutsche Bank AG, which saw its shares slump the most in three years.
US Senator Elizabeth Warren has called for regulators to raise the guarantees on accounts above the current US$250,000 threshold.
However, US Secretary of the Treasury Janet Yellen has said regulators are not looking to provide “blanket” deposit insurance without working with lawmakers.
SEMICONDUCTORS: The firm has already completed one fab, which is to begin mass producing 2-nanomater chips next year, while two others are under construction Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, plans to begin construction of its fourth and fifth wafer fabs in Kaohsiung next year, targeting the development of high-end processes. The two facilities — P4 and P5 — are part of TSMC’s production expansion program, which aims to build five fabs in Kaohsiung. TSMC facility division vice president Arthur Chuang (莊子壽) on Thursday said that the five facilities are expected to create 8,000 jobs. To respond to the fast-changing global semiconductor industry and escalating international competition, TSMC said it has to keep growing by expanding its production footprints. The P4 and P5
DOWNFALL: The Singapore-based oil magnate Lim Oon Kuin was accused of hiding US$800 million in losses and leaving 20 banks with substantial liabilities Former tycoon Lim Oon Kuin (林恩強) has been declared bankrupt in Singapore, following the collapse of his oil trading empire. The name of the founder of Hin Leong Trading Pte Ltd (興隆貿易) and his children Lim Huey Ching (林慧清) and Lim Chee Meng (林志朋) were listed as having been issued a bankruptcy order on Dec. 19, the government gazette showed. The younger Lims were directors at the company. Leow Quek Shiong and Seah Roh Lin of BDO Advisory Pte Ltd are the trustees, according to the gazette. At its peak, Hin Leong traded a range of oil products, made lubricants and operated loading
The growing popularity of Chinese sport utility vehicles and pickup trucks has shaken up Mexico’s luxury car market, hitting sales of traditionally dominant brands such as Mercedes-Benz and BMW. Mexicans are increasingly switching from traditionally dominant sedans to Chinese vehicles due to a combination of comfort, technology and price, industry experts say. It is no small feat in a country home to factories of foreign brands such as Audi and BMW, and where until a few years ago imported Chinese cars were stigmatized, as in other parts of the world. The high-end segment of the market registered a sales drop
Citigroup Inc and Bank of America Corp said they are leaving a global climate-banking group, becoming the latest Wall Street lenders to exit the coalition in the past month. In a statement, Citigroup said while it remains committed to achieving net zero emissions, it is exiting the Net-Zero Banking Alliance (NZBA). Bank of America said separately on Tuesday that it is also leaving NZBA, adding that it would continue to work with clients on reducing greenhouse gas emissions. The banks’ departure from NZBA follows Goldman Sachs Group Inc and Wells Fargo & Co. The largest US financial institutions are under increasing pressure
RSS