First Republic spoke to private equity before finding funding sources

NEW YORK, March 15 (Reuters) – First Republic Bank (FRC.N) has spoken to at least one private equity firm about raising capital ahead of securing funding from JPMorgan Chase & Co ( JPM.N) and US authorities have stepped in to support the industry, two sources familiar with the matter said.

The conversations, which have not previously been reported, shed new light on the frantic activity that took place over the weekend following the collapse of Silicon Valley Bank, as other lenders come under pressure were looking for ways to restore investor confidence.

First Republic offered various approaches and ideas, a third source familiar with the matter said, adding that private equity firms had capital to deploy and were looking for opportunities.

They added that talks on the private equity deal ended once First Republic announced its line of credit with JPMorgan.

The First Republic was not immediately available for comment.

The approach came before the US Federal Reserve and other regulators announced a series of emergency measures on Sunday evening to boost confidence in the banking system, which removed some of the urgency to conclude a Alright, the sources said.

First Republic said Sunday evening that it had secured additional funding through JPMorgan, giving it access to a total of $70 billion in funding from various sources. The additional borrowing capacity of the Fed as well as that of JPMorgan had inflated the amount of liquidity available to it.

JPMorgan did not immediately respond to requests for comment.

First Republic shares fell more than 60% on Monday on fears of bank contagion following the collapse of SVB Financial Group (SIVB.O) and Signature Bank (SBNY.O). SVB had seen deposits leak, many of which were uninsured. First Republic shares recouped some of their losses on Tuesday, up 27%.

One of the sources said other banks had also been looking for capital, but after the administration’s emergency measures on Sunday and a rout in bank stocks the next day, any deal was likely to take time.

In some cases, the situation has shifted from banks looking for capital to investors looking for bargains, one of the sources said.

Founded in 1985, First Republic had $212 billion in assets and $176.4 billion in deposits at the end of last year, according to its annual report.

About 70% of its deposits are uninsured, above the median of 55% for midsize banks and the third highest in the group after Silicon Valley Bank and Signature Bank, according to a Bank of America note.

The White House intervened on Tuesday, with an official saying it was carefully monitoring developments at the First Republic and other small banks after actions aimed at protecting depositors.

The official said the US banking system was in “a much better position right now” than if the measures had not been taken and depositors should have confidence that their funds would be protected.

Reporting by Greg Roumeliotis, Paritosh Bansal, Megan Davies; additional reporting by Nupur Anand and Pete Schroeder; edited by Paritosh Bansal and Kim Coghill

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