In a move that marks the third major US bank failure in two months, First Republic Bank has been seized by United States regulators and sold to JPMorgan Chase & Co, according to a statement by regulators on Monday.
JPMorgan Chase will take over most of First Republic’s assets and all its deposits, including uninsured ones. Other bidders in the auction run by US regulators included PNC Financial Services Group and Citizens Financial Group Inc, as per sources familiar with the matter.
The California Department of Financial Protection and Innovation took possession of First Republic, with the Federal Deposit Insurance Corporation (FDIC) acting as its receiver. The FDIC estimated that the cost to the Deposit Insurance Fund would be around $13 billion, to be finalized when the receivership is terminated.
First Republic Bank had total assets of $229.1 billion as of April 13 and $103.9 billion worth of deposits, as per the FDIC statement.
The failed bank’s 84 offices in eight states will reopen as branches of JPMorgan Chase Bank from Monday, according to the statement.
“Our government invited us and others to step up, and we did,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase. “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.”
This rescue comes less than two months after Silicon Valley Bank and Signature Bank failed amid a deposit flight from US lenders, forcing the Federal Reserve to step in with emergency measures to stabilize markets. Those failures came after crypto-focused Silvergate voluntarily liquidated.