- by cnn
- 30 Nov 2023
The US Federal Deposit Insurance Corporation (FDIC) is preparing to place First Republic under receivership, Reuters reported on Friday, as the worst banking crisis since 2008 continued to hammer mid-sized US banks.
The California-based bank looks set to be the third such financial institution to collapse this year, following the failure of Silicon Valley Bank and Signature in March.
Although the withdrawals have abated at many banks, First Republic appears to be in peril, even after receiving a $30bn infusion of deposits from 11 major banks in March.
First Republic and FDIC representatives did not immediately respond to requests for comment.
The Fed is also critical of how the bank managed executive compensation. The report indicates that executive compensation at the bank was geared toward short-term profits and the stock price. There were no incentives tied to risk management. Silicon Valley Bank notably had no chief risk officer at the firm for roughly a year, during a time when the bank was growing quickly.
Silicon Valley Bank was the go-to bank for venture capital firms and technology startups for years, but failed spectacularly in March, setting off a crisis of confidence for the banking industry. Federal regulators seized Silicon Valley Bank on 10 March after customers withdrew tens of billions of dollars in deposits in a matter of hours.
Associated Press and Reuters contributed to this report
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