Federal regulators in the US seized troubled First Republic Bank on Monday morning, making it happen the second bank failure largest in US history, and promptly sold all of its deposits and most of its assets to JPMorgan Chase Bank in an effort to prevent further banking turmoil in the United States.
San Francisco-based First Republic is the third midsize bank to fail in two months. The single largest bank failure was Washington Mutual, which collapsed at the height of the 2008 financial crisis and was also taken over by JPMorgan.
The First Republic has been in trouble ever since the collapses of Silicon Valley bank and signature bank in March, and investors and depositors were increasingly concerned that it would not survive due to the large number of uninsured deposits and exposure to loans with low interest rates.
The Federal Deposit Insurance Corporation said early Monday that the 84 branches of First Republic Bank in eight states ropen as branches of JPMorgan Chase Bank and depositors will have full access to all their deposits.
Stabilize the industry
The bailout of US regional bank First Republic, seized by US authorities before being largely taken over by JPMorgan Chase, it will “help stabilize” the banking sectorJPMorgan CEO Jamie Dimon estimated on Monday.
“I hope this helps stabilize everything,” Dimon said on a conference call with reporters ahead of the U.S. stock market opening.
Regulators have been working late last week and this weekend to find a way forward. before the opening of US stock markets.
They solicited bids for First Republic Bank assets e once again they turned to JPMorgan Chase, the largest bank in the country, with a reputation as a negotiator in times of crisis. Treasury officials also hired JPMorgan last month to spearhead a $30 billion funding package for First Republic.
“Our government has called on us and others to step forward, and we have,” said Jamie Dimon, president and CEO of JPMorgan Chase.
As of April 13, First Republic had about $229 billion in total assets and $104 billion in total deposits, the FDIC said. The FDIC estimated that its deposit insurance fund would take a $13 billion hit by taking the First Republic into receivership. His bailout of Silicon Valley Bank cost the fund a record $20 billion.
Before Silicon Valley Bank went bust, First Republic had a banking franchise that was the envy of most of the industry. His clients, mostly wealthy and powerful, rarely defaulted on their loans. The bank made much of its money by giving cheap loans to the wealthy, which reportedly included Meta Platforms CEO Mark Zuckerberg.
Filled with deposits from the well-heeled, First Republic saw total assets more than double to $102 billion at the end of the first quarter of 2019, when its full-time workforce was 4,600.
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Source: Clarin
Mary Ortiz is a seasoned journalist with a passion for world events. As a writer for News Rebeat, she brings a fresh perspective to the latest global happenings and provides in-depth coverage that offers a deeper understanding of the world around us.