June 16 (Bloomberg) -- Carlyle Group, Blackstone Group LP and TPG are leading a group of bidders in talks to buy Bank of America Corp.’s First Republic Bank, the San Francisco-based bank that caters to wealthy individuals, people familiar with the matter said.

Carlyle and Blackstone, the largest private-equity firms, and David Bonderman’s TPG may partner with First Republic Chairman James H. Herbert II, said one of the people, declining to be identified because the discussions are private. Bank of America, the biggest U.S. lender by assets, is selling businesses to raise capital after receiving $45 billion in government rescue funds.

First Republic, inherited by Charlotte, North Carolina- based Bank of America through its takeover of Merrill Lynch & Co., may fetch $700 million, according to CreditSights Inc. analyst David Hendler. Merrill Lynch bought the bank, which had assets of $15.3 billion at the end of 2007, for $1.8 billion that same year.

Buyout firms invested more than $1 billion in U.S. banks in May after financial companies worldwide racked up almost $1.5 trillion in writedowns and credit losses in the past two years. Washington, D.C.-based Carlyle is pursuing bank deals through a team headed by former U.S. Treasury Undersecretary Randal Quarles and former UBS AG banker Olivier Sarkozy. Carlyle and Blackstone are part of a group that agreed to buy BankUnited Financial Corp. last month.

Columbia Management

Representatives of Carlyle, Blackstone and TPG declined to comment, as did spokesmen at Bank of America and First Republic, which has banking or trust offices in 10 cities including New York, Las Vegas and Los Angeles. Blackstone is based in New York, while TPG is based in Fort Worth, Texas.

Bank of America is considering selling businesses including First Republic and Columbia Management Group as it seeks to raise capital, Chief Financial Officer Joe Price said on a conference call last month. Chief Executive Officer Kenneth Lewis was called before Congress last week to testify about the circumstances of his purchase of Merrill Lynch.

Carlyle has $85.5 billion of assets, trailing only New York-based Blackstone. Carlyle last July invested $75 million in Boston Private Financial Holdings Inc., the owner of private- banking companies.

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Last Updated: June 16, 2009 18:20 EDT