First Republic auction underway, with deal seen by Sunday -sources

By Chris Prentice, Saeed Azhar, Lananh Nguyen and Paritosh Bansal

(Reuters) -Banks including Citizens Financial (NYSE:) Group Inc, PNC Financial Services Group (NYSE:) and JPMorgan Chase & Co (NYSE:) are among roughly half a dozen bidders vying for First Republic Bank (NYSE:) in an auction process being run by U.S. regulators, according to sources familiar with the matter.

Guggenheim Securities is advising the U.S. Federal Deposit Insurance Corp (FDIC) on the sale process, two sources familiar with the matter said.

The process kicked off this week after First Republic, which got swept up in a banking crisis last month, failed to come up with a deal without government help, three of the sources familiar with the situation said.

The bidders were asked to give non-binding bids by Friday and are studying the bank’s books over the weekend, one of the sources said.

A deal is likely to be announced on Sunday night before Asian markets open, with the regulator expected to seize the troubled lender at the same time, three of the sources said.

The FDIC, Guggenheim and the banks declined to comment. First Republic also declined to comment.

A deal for First Republic would come less then two months after Silicon Valley Bank and Signature Bank (OTC:) failed amid a deposit flight from U.S. lenders, forcing the Federal Reserve to step in with emergency measures to calm markets.

A sale would bring to an end a weeks-long effort by First Republic to survive the market rout. Large banks had orchestrated an earlier lifeline for First Republic, injecting $30 billion in combined deposits from U.S. banking heavyweights, including Bank of America Corp (NYSE:), Citigroup Inc (NYSE:), JPMorgan and Wells Fargo (NYSE:) & Co.

When that deal failed to stabilize First Republic, the lender, known best for its rich clientele, tried to find other private-sector solutions.

A source familiar with the situation told Reuters on Friday that the U.S. banking regulator had decided the lender’s position had deteriorated and there was no more time to pursue a rescue through the private sector.

Shares of some other regional banks also fell on Friday, as it became clear that First Republic was headed for an FDIC receivership, with PacWest Bancorp down 2% after the bell and Western Alliance (NYSE:) down 0.7%.