JPMorgan Chase Acquires Battered First Republic Bank

First Republic bank, JPMorgan Chase Acquires Battered First Republic Bank

Key Takeaways:

  • JPMorgan acquired First Republic Bank
  • FDIC commented the investors are “protected.”
  • What took down the FRB?

YEREVAN ( – According to the announcement early on May 1, banking giant JPMorgan Chase & Co. will acquire most assets of First Republic Bank, which was hit by the Silicon Valley Bank contagion, facing en masse depositor exodus.

JPMorgan takes over First Republic Bank.

The takeover came in the wake of the Federal Deposit Insurance Corporation (FDIC) orchestrating an overnight deal to shut the embattled San Francisco lender. In detail, FRB will sell $93.5 billion of its deposits and most of its assets to JPMorgan, while the FDIC will get $10.6 billion.

Customers of First Republic Bank should continue to use their existing branch until they receive notice from JPMorgan Chase Bank, National Association, that it has completed systems changes to allow other JPMorgan Chase Bank, National Association, branches to process their accounts as well.

announced FDIC

As part of the transaction, First Republic’s 84 offices in 8 states will reopen as branches of JPMorgan on May 1 during normal business hours, the FDIC noted.

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The US Treasury said it was “encouraged” that the aforementioned deal would protect the First Republic depositors and minimize the costs to the FDIC’s deposit insurance fund. “The banking system remains sound and resilient, and Americans should feel confident in the safety of their deposits,” added the Treasury.

FRB did not survive the depositor exodus

In detail, the First Republic Bank was the largest US bank to suffer from the SVB contagion. The insolvency news came after the disastrous quarterly report on April 24, which further spooked clients into a mass exodus.

The report claimed depositors withdrew over $100 billion since the SVB crash. Neal Holland, the chief financial officer of FRB, said the bank is working to “restructure the balance sheet,” but the efforts were futile, given the additional plunge in stock price.

With the closure of several banks in March, we experienced unprecedented deposit outflows…We moved swiftly and leveraged our high-quality loan and securities portfolios to secure additional liquidity. We are working to restructure our balance sheet and reduce our expenses and short-term borrowings.

commented Holland.

The report showed that the long-term borrowings in Q1 2023 stood at $26 billion, while the short-term borrowings topped at a record $80.3 billion.

first republic, First Republic Bank stock FRC plunges 67% WTD with no bidders to save the day.
first republic, First Republic Bank stock FRC plunges 67% WTD with no bidders to save the day.
Excerpt from FRB’s quarterly revenue report.

According to sources close to FRB, the bank’s executives initially sought an “open-bank” solution, an asset sale that allows it to keep operating. However, some believe a “closed-bank” deal is more appropriate, a transfer of assets after FDIC takes over the lender, which subsequently happened.

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