US banking giant JPMorgan is poised to buy assets of First Republic Bank (FRB) after an early bailout failed. JPMorgan Chase & Co and various other banks submitted bids to acquire the troubled FRB assets on April 29.
The California Department of Financial Protection and Innovation closed the FRB on May 1 and entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) as receiver. The FDIC then entered into a buy and assume agreement with JPMorgan to protect depositors.
JPMorgan will take over all First Republic Bank assets, including uninsured deposits. FRB currently has $229.1 billion in assets and $103.9 billion in deposits. As part of the transition, 84 First Republic Bank locations in eight states will reopen as J PMorgan Chase. All depositors of the FRB will become part of JPMorgan and have access to all deposits that are FDIC insured. Customers can continue to use banking services at their current branches until they are notified of any changes from JPMorgan. In addition to the asset transfer, the FDIC and JPMorgan also entered into a loss-sharing agreement on residential and commercial loans acquired by FRB. Loan losses and any recoveries covered by the loss sharing agreement will be shared between the FDIC (in its capacity as receiver) and JPMorgan.
Trouble was brewing for the FRB on April 26 when news of a government takeover surfaced. The bank's shares have fallen since the announcement, falling 20% within hours. The days after the announcement were even more turbulent for the banks before regulators finally shut them down . FRB joins Silicon Valley Bank and Signature Bank as the latest US banks to fail in 2023.
