The Federal Deposit Insurance Corp. failed to create a level playing field for nonbank bidders pursuing First Republic Bank, according to FDIC board member Jonathan McKernan, Bloomberg News reported. “Since the SVB auction, I’ve pushed for changes to build more competitive tension in our failed-bank auctions so we get the best price,” McKernan said in an interview, referring to the seizure and sale of Silicon Valley Bank to First Citizens BancShares Inc. in March. “But the FDIC ran essentially the same process again for First Republic.” In the early hours of Monday morning, JPMorgan Chase & Co. emerged as the victor in a bidding process for San Francisco-based First Republic, beating out rivals including PNC Financial Services Group Inc., which submitted proposals supported by Apollo Global Management Inc. and BlackRock Inc., Bloomberg News reported this week. “We didn’t give nonbank bidders a real opportunity to participate on the same terms as bank bidders with respect to loss-share arrangements and deal financing, so, again, there’s a real question [of] whether we left value on the table,” McKernan said. “The bottom line here is the FDIC is hindering the ability of nonbanks to participate in these auctions. Their participation is really in name only.” An FDIC representative didn’t immediately respond to a request for comment. Read more.
The Senate Banking Committee will hold a hearing today at 10 a.m. ET titled, “Holding Executives Accountable After Recent Bank Failures.” Click here for more information.
