May 1 (UPI) — First Republic Bank was sold Monday to JPMorgan Chase, as regulators seek to calm a turbulent banking sector that has now seen three U.S. banks fail in less than two months.
The San Francisco-based bank was closed Monday by the California Department of Financial Protection and Innovation before the Federal Deposit Insurance Corporation entered an agreement with JPMorgan that sees it assume all of the troubled lender’s deposits and most of its assets.
“First Republic Bank’s 84 offices in eight states will re-open as branches of JPMorgan Chase Bank, National Association, today during normal business hours,” the FDIC said in a statement early Monday announcing the acquisition. “All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, National Association, and will have full access to all of their deposits.”
Deposits will continue to be insured by the FDIC, which said that First Republic had about $229.1 billion in total assets and $103.9 billion in total deposits as of April 13.
Under the deal, JPMorgan has agreed to purchase “substantially all” of First Republic’s assets, the federal regulator said.
“The resolution of First Republic Bank involved a highly competitive bidding process and resulted in a transaction consistent with the least-cost requirements of the Federal Deposit Insurance Act,” the FDIC said, adding that it estimates that the cost to the Deposit Insurance Fund will be about $13 billion, though the final cost will be determined later.
JPMorgan confirmed its acquisition of First Republic, saying that in taking on the lender, it was “supporting the U.S. financial system through its significant strength and execution capabilities.”
“Our government invited us and others to step up, and we did,” Jamie Dimon, chairman and chief executive officer of JPMorgan Chase, said in a statement. “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.”
First Republic’s failure follows that of California’s Silicon Valley Bank on March 10, and that days later by New York City-based Signature Bank.
The banks’ March failures had sent shockwaves of worry through the financial sector with focus turning to First Republic as it was the was next lender to come under stress.
On March 16, it received a $30 billion infusion from 11 of the largest U.S. banks, which seemingly failed to prevent its closure.
