JP Morgan will acquire the struggling First Republic Bank based in California after the US financial authorities intervened. The announcement was made on Monday by the government regulator for the sector. All efforts to rescue the troubled bank had failed. This information was reported by AFP.
The FDIC announced that they will be taking over First Republic Bank’s deposits and assets to safeguard depositors, through a purchase and acquisition agreement with JPMorgan Chase, the National Association of Columbus, and Ohio.
According to California’s Department of Financial Protection and Innovation, JPMorgan will safeguard all types of deposits, including unsecured ones, as well as most of the assets.
According to AFP, the First Republic recently reported a loss of over $100 billion in deposits during the first quarter of the year and was unable to provide an effective bailout, causing a significant decrease in its stock value.
Last week, an anonymous source disclosed that the US Treasury Department got in touch with six banks to inquire about their interest in purchasing assets from First Republic. Additionally, the federal government intervened with the agency responsible for guaranteeing bank deposits.
According to an AFP report, First Republic has assets of $233 billion as of March, making it the second-largest bank to file for bankruptcy in US history (excluding investment banks like Lehman Brothers). The largest was Washington Mutual’s bankruptcy in 2008.
According to Reuters, less than two months after the collapse of Silicon Valley and Signature banks, a deal has been made to buy First Republic Bank. This follows a wave of deposit flight from US banks, which forced the Federal Reserve to take emergency measures to maintain market stability.
After Silvergate Bank, which specifically dealt with cryptocurrencies, chose to liquidate its assets, these other banks also collapsed.
First Republic Bank currently has total assets of $229.1 billion and deposits of $103.9 billion, as reported by the Federal Deposit Insurance Corporation on April 13.
Jamie Dimon, the Chairman and CEO of JPMorgan Chase, stated that they have taken a step forward as requested by the government and others.
The statement mentions that the 84 branches of the collapsed bank across eight states will now operate as branches of JB Bank, which is now owned by Morgan Chase. This change is effective from Monday.