JPMorgan to acquire First Republic’s assets as US regulators intervene

JPMorgan Chase & Co will on Monday acquire the First Republic Bank after all rescue efforts failed. As part of the transaction, JPMorgan Chase will assume all the deposits of the First Repupblic Bank. JPMorgan has also agreed to purchase all of First Republic’s assets, as per a release by the US Federal Deposit Insurance Corp (FDIC).

First Republic Bank’s 84 offices across 8 states will reopen as branches of the JPMorgan Chase bank. All First Republic Bank depositors will become depositors of the JPMorgan Chase Bank, National Association and will have full access to all of their deposits.

The release further stated: “Customers of First Republic Bank should continue to use their existing branch until they receive notice from JPMorgan Chase Bank, National Association, that it has completed systems changes to allow other JPMorgan Chase Bank, National Association, branches to process their accounts as well”.

Furthermore, the FDIC and JPMorgan Chase are entering into a loss-share transaction on single family, residential and commercial loans of the First Republic Bank. The FDIC as well as JPMorgan Chase will share in losses and potential recoveries on loans covered under the loss-share agreement. The transaction aims at maximizing recoveries on assets and minimising disruptions for loan customers.

First Republic Bank had around $229.1 billion in total assets and $103.9 billion in total deposits as of April 13, 2023. JPMorgan was among the bidders vying for the bank along with Citizens Financial Group, PMC and Financial Services Group.

The development comes around two months after Silicon Valley Bank and Signature Bank failed, prompting the US Federal Reserve to take emergency measures to stabilise markets and allay depositors’ fears.

First Republic Bank shares tumbled 36% in premarket trading. The stock has lost 97% of its value this year. JP Morgan shares rose 2.6% while S&P 500 futures were trading flat.