Black Monday

[ronaldson]

First Republic Bank gone today ( Sunday US time )? Wall Street Journal has breaking news re FED seeking bids in an effort to resolve before Asian markets open.

[Daytr]

First Republic Bank gone today ( Sunday US time )? Wall Street Journal has breaking news re FED seeking bids in an effort to resolve before Asian markets open.

Absolute bargain at $3.50. The big banks are feasting like sharks on a boil up as these smaller banks gets undermined by lack of confidence.

I shorted the S&P500 a few days ago as similar to banks I think it will be the smaller caps that will be hurt by increased funding costs. Russell 2000 has underperformed the other indices lately as well.

[ronaldson]

WSJ notes that FRB share price was $122.50 on March 1 and fallen to $3.51 on April 28. Says JP Morgan and PNC Financial services have submitted bids by the deadline and Bank of America may have done so. Likely FDIC will seize assets later on Sunday US time.

WSJ says if so it will be the second largest bank failure in US history.

[Daytr]

One could argue this isn't a bank failure but purely a run on confidence as I don't think they were losing money, however the contagion effect to run to bigger is better has overrun them. This is is a consolidation & potentially a huge windfall to the purchaser. The analysis of their loan book will be interesting, however as there is a 30 year bond market in the US I would assume it was fully hedged. I haven't looked at this in detail, but it reminds me of the banking asset grab post 2008 where the big banks swallowed up smaller banks as the compliance & capital costs over ran them.

[Valuegrowth]

https://www.cnbc.com/2023/04/30/char...ty-market.html

[Valuegrowth]

[Daytr]

I think the analysis from the 99 year old is better than the YouTube clip

[Valuegrowth]

I agree too.

[SailorRob]

One could argue this isn't a bank failure but purely a run on confidence as I don't think they were losing money, however the contagion effect to run to bigger is better has overrun them. This is is a consolidation & potentially a huge windfall to the purchaser. The analysis of their loan book will be interesting, however as there is a 30 year bond market in the US I would assume it was fully hedged. I haven't look at this in detail, but it reminds me of the banking asset grab post 2008 where the big banks swallowed up smaller banks as the compliance & capital costs over ran them.

God this guy is a muppet.

[ronaldson]

Yep, First Republic Bank is officially gone, acquired (mostly) by JP Morgan with all 84 branches to open on Monday US as JP Morgan, which has assumed all $92b in deposits and bought most assets including $173b in loans and $30b in securities. Estimated cost to FDIC is $13b (SVB was estimated at $20b and Signature Bank at $2.5b) to resolve. These are mindboggling numbers.

Hopefully some stability will now prevail - or is there more to follow?