First Republic Bank has failed, making it another American bank to collapse this year. Despite attempts to revive it, the California Department of Financial Protection and Innovation (DFPI) has taken over the bank. The Federal Deposit Insurance Corporation (FDIC) was appointed as the receiver by the California financial regulator, and even JPMorgan bid for the bank’s assets.
- In a press release, the financial services company confirmed it had acquired all of First Republic’s deposits, including approximately $173 billion of loans and $30 billion of securities. It has also assumed nearly $92 billion of deposits, out of which $30 billion of large bank deposits, which will be repaid post-close or eliminated in consolidation.
- As part of the deal, FDIC revealed that 84 offices of the First Republic in eight states will reopen as branches of JPMorgan Chase Bank, National Association.
- All depositors of the lender will become depositors of JPMorgan Chase Bank, National Association and will have full access to all of their deposits.
- Jamie Dimon, Chairman and CEO of JPMorgan Chase, commented on the takeover, saying:
“Our government invited us and others to step up, and we did. Our financial strength, capabilities, and business model allowed us to develop a bid to execute the transaction in a way to minimize costs to the Deposit Insurance Fund. This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise.”
- JPMorgan expects to recognize an upfront, one-time, post-tax gain of around $2.6 billion, which does not reflect the $2.0 billion of post-tax restructuring costs anticipated over the next 18 months.
- This development comes a month after Big Banks, a consortium of 11 major US banks, injected $30 billion to stabilize First Republic.
