JP Morgan to take over failed First Republic Bank

Washington DC, May 1 (EFE).- JP Morgan is set to take over most assets and deposits of the failed First Republic Bank in an acquisition that has been brokered by United States regulators, financial authorities announced on Monday.

This is the latest acquisition as the US scrambles to contain the banking failures which first emerged in March with the collapse of Silicon Valley Bank and two other mid-to-small-size banks.

The Federal Deposit Insurance Corporation (FDIC) said JP Morgan had submitted a bid for all of First Republic Bank’s deposits after the federal agency seized control of the embattled entity.

“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,” the FDIC statement added.

According to the regulator, as of Apr. 13, First Republic had approximately $229.1 billion in total assets and $103.9 billion in total deposits.

The US banking giant has also agreed to acquire “substantially all of First Republic Bank’s assets.” the FDIC said.

First Republic currently has around $173 billion in loans, $30 billion in securities and $92 billion in deposits that “will continue to be insured by the FDIC.”

“Customers do not need to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits,” the regulator said.

JP Morgan CEO Jamie Dimon said, “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,” Dimon continued.

“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,” the CEO added.

The loss–share transaction is projected to maximize recoveries on the assets by keeping them in the private sector, according to Dimon.

The FDIC said the acquisition of First Republic was “a highly competitive bidding process and resulted in a transaction consistent with the least-cost requirements of the Federal Deposit Insurance Act.”

The agency estimated that the cost of the operation will hover around $13 billion although the final figure is yet to be confirmed.

First Republic shares tumbled 43.3% in premarket trading to $3.51, while JP Morgan shares rose by 0.87% and settled at $138.24. EFE emm/ch/sc