First Republic Bank Goes Independent
Bank of America agrees to sell
Bank of America says it will sell First Republic Bank, but BofA assures the public that the purpose of the sale is not to meet the government’s capital requirements. The San Francisco Chronicle reports that in May the government ordered Bank of America to raise $34 billion after it conducted a stress test.
Bank of America says it had raised $40 billion by July. Bank of America is selling First Republic Bank to a group of investors. In the group are First Republic’s management and funds managed by Colony Capital and General Atlantic.
How much is First Republic Bank worth?
Bank of America would not disclose the selling price for First Republic Bank. However, experts say book price for First Republic would be in the $1 billion range. First Republic Bank’s main business is providing personal banking services such as debt consolidation and asset management for “high-net-worth individuals.”
First Republic Bank also gives out commercial and business real estate loans and was a pioneer in the “jumbo home loans” business.
The road to be sold
First Republic Bank hasn’t been owned by Bank of America long. In fact, Bank of America has only owned First Republic Bank since January, when Bank of America bought Merrill Lynch.
The sale of First Republic Bank actually returns it to the state it was in not long ago. Merrill Lynch purchased First Republic Bank from shareholders in September 2007.
First Republic Bank future
Not much will change for First Republic Bank’s current customers. The Chronicle reports:
Jim Herbert, First Republic’s chairman and founding chief executive officer, and Katherine August-deWilde, president and chief operating officer, will continue in their current positions along with the rest of the management team, BofA said in a press release.
Besides personal financial services, First Republic also takes deposits and gives loans to individuals.