Source: https://www.linkedin.com/feed/update/urn%3Ali%3Ashare%3A7058837898149724160
First Republic Bank Is Seized, Sold to JPMorgan in Second-Largest U.S. Bank Failure: https://lnkd.in/gXknXHzi : #Lender teetered for weeks after #SiliconValleyBank’s #collapse in March: Regulators seized #FirstRepublicBank #FRC and struck a deal to sell the bulk of its operations to #JPMorganChase #JPM & Co., heading off a chaotic collapse that threatened to reignite the recent banking crisis. JPMorgan said it will assume all of First Republic’s $92 billion in deposits—insured and uninsured. It is also buying most of the bank’s assets, including about $173 billion in loans and $30 billion in securities. As part of the agreement, the Federal Deposit Insurance Corporation (FDIC) will share losses with JPMorgan on First Republic’s loans. The agency estimated that its #insurance #fund would take a hit of $13 billion in the deal. JPMorgan also said it would receive $50 billion in #financing from the #FDIC. #SanFrancisco-based #FirstRepublic, the second-largest #bank to #fail in U.S. history, lost $100 billion in deposits in a March run following the collapse of fellow Bay Area lender Silicon Valley Bank. It limped along for weeks after a group of America’s biggest banks came to its rescue with a $30 billion deposit. Those deposits will be repaid after the deal closes, #JPMorgan said.
Three of the four largest-ever U.S. #bank #failures have occurred in the past two months. First Republic, with some $233 billion in assets at the end of the first quarter, ranks just behind the 2008 collapse of #WashingtonMutual Inc. Rounding out the top four are Silicon Valley Bank and #SignatureBank, a New York-based #lender that also failed in March. The deal means #JPMorgan, the #largest #bank in the U.S., is poised to emerge from the current crisis even bigger. The #lender has said it got about $50 billion in new #deposits from panicky customers looking to move their money to a too-big-to-fail bank following March’s #failures. The megabank said it bid to help stabilize the #financial #system.
First Republic’s 84 #branches are reopening as part of JPMorgan Monday during normal business hours, and customers will have full access to their deposits, the #FDIC said. The move protects the bank’s #depositors but likely leaves #shareholders with nothing. The immediate cause of First Republic’s collapse was a #smartphone-enabled #exodus of panicked depositors with big #uninsured #balances, but the bank’s problems were rooted in a wrong-way #bet on #interest #rates. Big deposits from customers with lots of #cash funded low-rate #jumbo #mortgages to wealthy home buyers.
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