In what is the third major US bank collapse in two months and the second-largest bank collapse in the history of the United States, the California Department of Financial Protection and Innovation (DFPI) announced on Monday that it had closed First Republic Bank and reached an agreement to sell its assets to JPMorgan Chase & Co. and National Association.
As of April 13, First Republic had $103.9 billion in total deposits; this amount appears to have decreased over the last few weeks, as JPMorgan stated it anticipates taking over control of about $92 billion in deposits.
JPMorgan Bank was one of many bidders that submitted final bids on Sunday in an auction being held by US authorities, along with PNC Financial Services Group and Citizens Financial Group Inc.
According to a statement from the regulators, the giant Wall Street bank would acquire the majority of First Republic’s assets as well as all of its deposits, including uninsured ones.
All depositors, including those with balances higher than the $250,000 insurance cap, will be able to access their money on Monday when the 84 locations of the bank in eight states reopen as Chase branches, according to the agreement.
Less than two months ago, the Federal Reserve was forced to intervene with emergency measures to calm the markets after Silicon Valley Bank and Signature Bank failed due to a deposit flight from American lenders. Those failures followed the voluntary liquidation of cryptocurrency-focused Silvergate.
In a statement, JPMorgan Chase Chairman and 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,” he added.
The FDIC expects that the deal will cost its Deposit Insurance Fund $13 billion, and as part of the agreement, the government agency will split losses with JPMorgan.
The bank’s collapse comes after its stock shares fell more than 97% since Silicon Valley Bank’s issues first became public in mid-March, alarming investors about the status of the banking industry. A $30 billion rescue offered by some larger banks was insufficient to help First Republic turn things around.
First Republic currentlyFirst Republic currently owns assets worth $229.1 billion in total. This makes the loss of First Republic the second-largest bank failure in American history, surpassing even the failure of Silicon Valley Bank in March, which had assets worth $209 billion at the time of its collapse.