Newsman: JPMorgan Chase said it had acquired “the substantial majority of assets” and assumed the deposits, insured and uninsured, of First Republic from the Federal Deposit Insurance Corporation, the independent government agency that insures deposits for bank customers.
“In carrying out this transaction, JPMorgan Chase is supporting the US financial system through its significant strength and execution capabilities,” the bank said in a statement
The Federal Deposit Insurance Corporation said early Monday that First Republic Bank’s 84 branches in eight states will reopen Monday as branches of JPMorgan Chase Bank.
Regulators seized troubled First Republic Bank and sold all of its deposits and most of its assets to JPMorgan Chase Bank in a bid to head off further banking turmoil in the U.S.
The FDIC took control of the embattled First Republic and then immediately announced the sale. The failure will cost the FDIC about $13 billion. That money will be paid by the nation’s banks, which pay premiums to support the agency.Regulators worked through the weekend to find a way forward before U.S. stock markets opened. Markets in many parts of the world were closed for May 1 holidays Monday. The two markets in Asia that were open, in Tokyo and Sydney, rose.
As of April 13, First Republic had approximately $229 billion in total assets and $104 billion in total deposits, the FDIC said. At the end of last year, the Federal Reserve ranked it 14th in size among U.S. commercial banks.
San Francisco-based First Republic is the third midsize bank to fail in two months. It has struggled since the collapse of Silicon Valley Bank and Signature Bank and investors and depositors had grown increasingly worried it might not survive because of its high amount of uninsured deposits and exposure to low interest rate loans.
Before Silicon Valley Bank failed, First Republic had a banking franchise that was the envy of most of the industry. Its clients – mostly the rich and powerful – rarely defaulted on their loans. The 72-branch bank has made much of its money making low-cost loans to the wealthy, which reportedly included Meta Platforms CEO Mark Zuckerberg.
Flush with deposits from the well-heeled, First Republic saw total assets more than double from $102 billion at the end of 2019’s first quarter, when its full-time workforce was 4,600.
But the vast majority of its deposits, like those in Silicon Valley and Signature Bank, were uninsured – that is, above the $250,000 limit set by the FDIC. Since the crisis, First Republic has been looking for a way to quickly turn itself around. The bank planned to sell off unprofitable assets, including the low interest mortgages that it provided to wealthy clients. It also announced plans to lay off up to a quarter of its workforce, which totaled about 7,200 employees in late 2022.