Analysis of some reasons why FRC incident caused FUD again (1):
1. FRC’s first-quarter earnings report showed deposits fell sharply to $104 billion, below expectations of $137 billion, and it had only $45 billion in cash and unused borrowing lines.
2. The bank announced it was considering selling up to $100 billion in assets to pave the way for a capital increase.
3. FRC has failed to find a buyer for either its equity or loan portfolio, however an outright sale would have resulted in huge capital losses and further damage to the balance sheet.
4. In addition, market bidders also tend to believe that trading conditions will be better when the target actually goes bankrupt, which can also be confirmed by the successful "sale" of SVB/Signature Bank/Credit Suissue.
