First Republic Bank, the San Francisco-based lender that was cut to junk by S&P Global Ratings and Fitch Ratings on Wednesday, is exploring strategic options including a sale, according to people familiar with the matter.
The bank, which is also considering options to meet liquidity, is expected to attract interest from larger rivals, said several of the people, who all spoke on condition of anonymity because of confidential information. No decision has been made and the bank may still choose to remain independent, he said. A spokeswoman for First Republic Bank declined to comment.
First Republic said it has more than $70 billion in unused liquidity to fund operations from agreements that include the Federal Reserve and JPMorgan Chase & Co. giving it a market value of $5.8 billion.
“Additional lending capacity from the Federal Reserve, continued access to financing through the Federal Home Loan Bank, and the ability to access additional financing through JPMorgan Chase & Co. increases, diversifies, and further strengthens the existing liquidity profile of First Republic,” said the bank. in a statement Sunday.
The lender specializes in private banking and wealth management, and has sought to differentiate itself from Silicon Valley Bank, which has been seized by US regulators. Unlike SVB, which counts startups and venture firms among its biggest clients, First Republic says no sector represents more than 9% of total business deposits.