JPMorgan Chase to buy most First Republic assets after bank becomes third in US to fail since March
By Chris Isidore and Olesya Dmitracova, CNN
JPMorgan Chase is buying most assets of First Republic Bank and assuming all of the lender’s deposits in a deal announced Monday that was arranged by the US Federal Deposit Insurance Corporation.
JPMorgan said it had acquired “the substantial majority of assets” and assumed the deposits, insured and uninsured, of First Republic Bank from the FDIC, 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 FDIC took control of the embattled First Republic and then immediately announced a sale of many of its assets and deposits. It makes the lender the second-largest bank failure in the nation’s history.
The move represents the latest effort by federal regulators to prop up consumer confidence in the banking system, which has now suffered three major bank failures in the last six weeks. Silicon Valley Bank and Signature Bank both were taken over by the FDIC last month following runs on those banks by their customers.
The collapse of those banks sparked weeks of speculation about the health of US regional banks, especially those with a largely uninsured deposit base.
Deposits at First Republic will continue to be insured by the FDIC, and “customers do not need to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits,” the agency said in a statement Monday.
“As part of the transaction, First Republic Bank’s 84 offices in eight states will reopen as branches of JPMorgan Chase Bank, National Association, today during normal business hours,” it noted.
First Republic, which started operations in 1985 with a single San Francisco branch, is known for catering to wealthy clients in coastal states. It had assets of $233 billion as of the end of March. As of the end of last year, it was the nation’s 14th-largest bank, according to a ranking by the Federal Reserve.
It has branches in high-income communities such as Beverly Hills, Brentwood, Santa Monica and Napa Valley, California; in addition to San Francisco, Los Angeles and Silicon Valley. Outside of California, branches are in other high-income communities such as Palm Beach, Florida; Greenwich, Connecticut; Bellevue, Washington; and Jackson, Wyoming. It had about 7,200 employees as of the end of last year.
The bank’s failure comes after the stock plunged more than 97% since the problems at Silicon Valley Bank surfaced in mid-March, worrying investors about the state of the banking sector. Attempts by some larger banks to provide a $30 billion dollar lifeline proved to be insufficient to turn things around at First Republic.
— This is a developing story and will be updated.
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