Skip to content

First Republic Bank Considers $100B Asset Sales for Financial Boost

According to Bloomberg, First Republic Bank (NYSE: FRC) is reportedly considering selling $50 billion to $100 billion in long-dated securities and mortgages. The move is part of a larger plan to enhance the bank's financial situation.

First Republic Bank logo
First Republic Bank logo

Reducing Asset-Liability Mismatch

The potential sales aim to decrease the bank's asset-liability mismatch, with possible buyers including major U.S. banks. These buyers might receive warrants or preferred equity as an incentive to purchase assets above their market value.

Strengthening Financial Position and Avoiding FDIC Seizure

First Republic Bank is working to strengthen its financial position to avoid being taken over by the Federal Deposit Insurance Corp (FDIC). The bank may also be preparing for a capital raise.

U.S. Government Involvement in Stabilizing Lender

Sources suggest that the U.S. government might need to enable negotiations with some of the country's largest banks to stabilize the First Republic as it works on its turnaround.

Share Decline and Strategic Options

First Republic shares experienced a 40% decline on Tuesday after reporting a larger-than-expected deposit decrease for the first quarter. The bank also announced it is exploring strategic options to improve its position.