Author: Mike Segar | Reuters
The US banking regulator agrees to sell the entity to protect customers
United States regulators announced this Monday that JP Morgan had bought the assets of First Republic Bank following its intervention and closure “to protect depositors”, becoming the third entity to fail in just two months in the North American country.
“First Republic Bank was closed today by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver,” the FDIC said in a statement, adding that “to protect depositors” it continued with the sale of assets to JP Morgan Chase.
Thus, he emphasized that JP Morgan will “take over all the deposits” and “virtually all the assets of First Republic Bank”, after making an offer to take over all the deposits. “As part of the transaction, 84 First Republic offices in eight states will reopen as branches of JP Morgan Chase, beginning today and during business hours,” he specified.
The FDIC noted that “all First Republic depositors will become JP Morgan Chase depositors and will have full access to all of their deposits,” while emphasizing that “deposits will remain FDIC-insured and customers do not need to change their banking relationships to retain deposit insurance up to the applicable limits.”
“First Republic clients should continue to use their current branch until they are notified by JP Morgan that it has completed changes to its systems to allow other branches to also process their accounts,” the agency said in a statement, released via its website pages.
On the other hand, he revealed that as of April 13, First Republic had about $229.1 billion (about €208.325 million) in total assets and $103.9 billion (about €94.481 million) in deposits. “In addition to taking over all deposits, JP Morgan agrees to buy nearly all of First Republic’s assets,” he said.
The FDIC further explained that both the agency and JP Morgan “entered into a loss sharing transaction on the family, residential and commercial loans they obtained from the former First Republic.” “The FDIC, as servicer, and JP Morgan will share the losses and potential recoveries of the loans covered by the loss sharing agreement,” it explained.
Finally, the FDIC has estimated that the cost of the Deposit Insurance Fund will be about 13,000 million dollars (about 11,821 million euros).
San Francisco-based First Republic Bank was one of the entities targeted during the crisis that began with the collapse of Silicon Valley Bank (SVB) and Signature Bank. The bank’s shares went from trading at $122.50 on March 1 to just $3 last Friday, with the FIDC intervention already taken for granted.
Shortly after the collapse of SVB and Signature in March, major US banks agreed to a $30 billion loan to First Republic at the request of Treasury Secretary Janet Yellen. The entity began operations in 1985 with one office in San Francisco and is known for hosting wealthy clients from coastal states. It currently has 82 branches, according to its website, most of which are in affluent neighborhoods.
Source: La Vozde Galicia
I am Jason Root, author with 24 Instant News. I specialize in the Economy section, and have been writing for this sector for the past three years. My work focuses on the latest economic developments around the world and how these developments impact businesses and people’s lives. I also write about current trends in economics, business strategies and investments.
