Why First Republic Has Not Done a Deal

The regional lender was given a $30 billion lifeline by big banks, but it has yet to raise more cash, sell assets, or itself.

First Republic will announce its quarterly earnings on January 29, the first time since Silicon Valley Bank's collapse triggered a regional banking crises. Moody's downgraded eleven regional lenders, including Zions, on Friday. First Republic shares are down nearly 90% over the last six months despite the $30 billion in lifeline from some of the largest banks.

Why hasn't a deal been made to raise cash, sell assets or the company itself?

The challenge is huge. The hole in First Republic's balance sheet is estimated to be around $25 billion. This raises the issue of who will absorb these liabilities -- and in what way. DealBook reports that First Republic has been trying to solve this problem by combining the government with big banks and private equity. (Though it may not involve all three), DealBook says. Each of these parties has its own priorities, deadlines, and constraints. Discussions continue.

How much time remains? First Republic will not announce a deal along with its earnings. It is expected to provide guidance regarding the stability of the deposit base as well as the potential size of losses. First Republic still has time to fix its problem, assuming that the decline in these rates has been moderated. The bank's decision to suspend dividends for its preferred shares is a clear indication that it is focused on managing its cash. The bank has already lost some wealth advisers. This could change if there are any further shocks in the commercial real-estate industry that cause another run on the deposits or if other unexpected issues arise.

Analysts say that these challenges are not lethal yet, but they may be a bit painful. First Republic is in a holding pattern. Wedbush Securities analysts wrote that the only way to acquire FRC is via receivership. This would allow a potential buyer to benefit from a bargain price courtesy of FDIC. Wedbush Securities analysts wrote on April 10 that "FRC will continue to operate as a standalone company for the near future."


Alissa Heinigerscheid, who was responsible for Bud Light's partnership of a transgender celebrity, has taken a leave following criticisms about the company's efforts to embrace more inclusive marketing. Budweiser has been attacked by others for its attempts to calm the controversy.

Twitter's new verification system takes an unexpected turn. The social network, which had stripped thousands of users of their checkmark icons in an effort to increase subscriptions to Twitter Blue, has now restored badges for some celebrities, including the late chef and author Anthony Bourdain. Critics claimed that the confusion was just the latest sign of chaos under Elon Musk at Twitter.

The dean of Tulane Law School is leaving. David Meyer will be the dean at Brooklyn Law School. Meyer has been in the position since 2010, and has overseen Tulane's Corporate Law Institute which is the largest gathering of M.&A. Lawyers, bankers, and other advisors descend on New Orleans to discuss business.

Yesterday, Jeff Shell announced that he was stepping down from his position as C.E.O. NBCUniversal, after an inappropriate relationship between an employee and Shell was revealed.

It leaves a gap at the top of NBCUniversal, at a time when the company, and its parent Comcast, are trying to determine its future.

Shell was fired after a week-long investigation. A woman, who The Wall Street Journal reported was a veteran reporter at NBCUniversal, filed a complaint. Comcast revealed the results of an investigation conducted by a law firm outside the company on Sunday.

Brian Roberts told his employees that he was "disappointed" to have this information. "We built the company on a foundation of integrity."

Shell, the longtime Comcast executive with Roberts's attention, is not known to be replacing him. Mike Cavanagh will be overseeing the business in the interim. He is Comcast's President and Roberts's apparent heir.

Mark Lazarus who is the head of NBCUniversal TV and streaming, Cesar Conde who heads up its news division, and Donna Langley who chairs Universal Pictures are all possible candidates for a longer-term position.

Shell's departure occurs at a time when NBCUniversal is struggling to meet the challenges of today's media age. Peacock's streaming service lost $2.5 billion in the past year, and it is expected to lose another $3 billion this coming year. Shell has long urged NBCUniversal's streaming service to be adopted. Shell led the effort to move NBCUniversal's content from Hulu, which Comcast controls about a third but is controlled Disney.

NBCUniversal’s cable channels also suffer from the decline in traditional television viewing.

The strong performance of Universal Pictures "Super Mario Bros. Movie" is a bright spot. It has earned $871 million worldwide and is this year's most successful title.

The future of the division is unclear. Comcast, which has a media division, is weighing all options. Last year, it considered combining NBCUniversal and the video game company Electronic Arts, with the goal of spinning out the new business. This deal did not happen but it shows that Comcast is considering all options for its media unit. Last year, the conglomerate considered combining NBCUniversal with video game giant Electronic Arts, aiming to spin out the new business.

Comcast's executives will be asked many questions when they report their earnings on Thursday.

Credit Suisse today revealed more about its final days in the last financial report it issued before being sold to UBS. This included a massive flight of capital, which most likely convinced Swiss regulators the struggling lender was in need of a rescue.

Credit Suisse said that clients pulled $69 billion of assets from the company in the first three months, with the majority of the outflows occurring in the second half. This reflects the loss of trust in the company following the turmoil caused by the collapse Silicon Valley Bank.

Credit Suisse borrowed billions of dollars from the Swiss central banks to calm investors' concerns about the health of the bank. However, after months of doubts growing about the lender's ability to survive - driven by scandals and financial mistakes - the authorities finally concluded that it needed to be saved and orchestrated the sale of the lender to UBS.

Credit Suisse has lost $1.46 billion in Swiss Francs for the entire quarter.

Credit Suisse's clients haven't returned in full yet, despite the fact that it is about to be acquired by its more powerful rival. This highlights the difficulties UBS will face in stabilizing the bank that it bought for $3.2 billion.

Credit Suisse has also terminated a $175-million deal to purchase M. Klein, a boutique financial advisory company owned by Michael Klein, formerly a board member and renowned dealmaker. This acquisition was intended to support Credit Suisse's turnaround plan, which involved combining their investment bank with Klein’s and spinning off the business.

Bed Bath & Beyond filed for bankruptcy on Sunday after months of trying come up with a plan to save the company. Bed Bath & Beyond's bankruptcy filing, just days after David's Bridal filed for bankruptcy is the latest indication that the post-pandemic landscape of retail boosted by stimulus checks and free money is over.

Bed Bath & Beyond was in debt. According to the bankruptcy filing, as of November 2020 the company had approximately $1.5 billion cash, while it owed $1.2 billion. It spent $1 billion on buybacks as revenues plummeted. Bed Bath & Beyond was harmed by the sudden and sharp decline in its share price. The stock is now trading for less than $1 a month, after peaking around $80 a decade earlier.

According to the filing, during the third quarter 2021, Bed Bath & Beyond was unable fulfill estimated $100 million of sales due to a lack of products. Bed Bath & Beyond slowed payment to vendors and reduced orders at the beginning of last year in order to focus on its private label brands. Suppliers went elsewhere.

Sue Gove became the permanent C.E.O. In October, it was reported that stock levels had reached 70 percent of their previous holiday season.

The brick-and mortar operations of the company were a burden. Bed Bath & Beyond failed to invest enough in ecommerce and never managed to cope with the deadly combination of declining store sales combined with holding onto the huge expenses that come with having over 300 outlets.

This week, several big tech companies will announce their quarterly results. The U.S. economy will also release its first quarter data. And President Biden may announce his intention to run for another term.

Tomorrow, Alphabet, Microsoft and McDonald's will report on their respective job cuts and competition in A.I.; Pepsi, Nestle and McDonald's will give an indication of consumer confidence, and UBS will announce its results.

Wednesday: Meta releases its results following the latest round of layoffs. British regulators will soon rule on Microsoft’s $69 billion acquisition of Activision Blizzard.

Amazon will announce its earnings on Thursday, after the stock rose last week following a report that said sales would likely exceed analyst estimates. The U.S. releases its first-quarter G.D.P. figures.

Investors will be looking at ExxonMobil on Friday to see if it can continue its booming profits despite the high energy prices.


What do tech tycoons like Jeff Bezos Bill Gates Marc Benioff all have in common as an investment? Nuclear fusion. (WSJ)

Tomorrow, an auction will be held for the failed crypto lender Celsius. Bidders are expected to include Coinbase, the exchange operator. (Fortune)


The Sackler Family, who own the OxyContin maker, donated $19 million to an advisory group chartered by the federal government that helped shape how the government responded to the opioid epidemic. (NYT)

"Small Towns Chase America’s $3 Trillion Climate Gold Rush". (WSJ).

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