Investing.com – Bloomberg reported on Tuesday that, according to some sources, the First Republic Bank (NYSE:) is reportedly considering divesting $50-100 billion of securities and long-term mortgages as part of a broader plan to improve its financial health.
The potential sales would help reduce the bank’s asset-liability mismatch, people familiar with the matter said; prospective buyers, including large US banks, could receive warrants or preferred stock as a rationale for buying assets above their market value.
Additionally, they said the lender is looking to strengthen its financial position to avoid being seized by Federal Deposit Insurance Corp. and potentially prepare for a capital raise.
In addition, sources told Bloomberg that the US government may need to allow negotiations with some of the country’s largest banks to stabilize the lender as it plans to complete its turnaround.
Shares of First Republic are currently down more than 40% on Tuesday after posting a larger-than-expected drop in deposits in the first quarter. Furthermore, FRC said it is exploring strategic options.