Regulators have indicated that they plan to announce the winner by 20:00, before markets open in Asia. PNC executives spent most of the weekend at the bank’s Pittsburgh headquarters drafting the application. Executives from Citizens, based in Providence, Rhode Island, gathered at offices in Connecticut and Massachusetts.
But 8 p.m. passed, and there was no word from the FDIC. Several hours of silence followed.
For three smaller banks, the deal would be crucial, giving them a much wider presence in wealthy places like the San Francisco Bay Area and New York. PNC, the sixth largest US bank, would shore up its position to challenge the country’s four big commercial lenders – JPMorgan, Bank of America, Citigroup and Wells Fargo.
Ultimately, JPMorgan not only offered more money than others, but agreed to buy the vast majority of the bank, two people familiar with the process said. Regulators were also more willing to accept the bank’s offer because it was probably easier for JPMorgan to integrate First Republic affiliates into its business and manage the smaller bank’s loans and mortgages by holding or selling them, the two sources said.
While small bank executives waited for their phones to ring, the FDIC and its advisers continued to negotiate with Mr. Dimon and his team, who sought assurances that the government would protect JPMorgan from losses, one source said.
Around 3 am, the FDIC announced that JPMorgan would acquire First Republic.
An FDIC spokesperson declined to comment on other bidders. In a statement, the agency said, “First Republic Bank’s decision included a highly competitive bidding process and resulted in a deal that met the federal deposit insurance law minimum cost requirements.”
This announcement received wide support in the financial industry. Robin Vince, president and chief executive officer of the Bank of New York Mellon, said in an interview that it was “like a cloud had cleared.”
Some financial analysts have warned that the celebrations may be overblown.
Many banks still have hundreds of billions of dollars of unrealized losses on Treasuries and mortgage-backed securities purchased when interest rates were very low. Some of these bond investments are now worth a lot less because the Federal Reserve has raised rates sharply to bring down inflation.