JPMorgan Chase wins bid to take over First Republic, bankrupt from March banking crisis
The US bank JPMorgan Chas has won the bid to buy the assets of the bankrupt First Republic Bank (FRB), one of the victims of the March banking crisis in the U.S. and in which many of its customers withdrew deposits, the U.S. Federal Deposit Insurance Corporation (FDIC) reports Monday.
The FDIC, an independent U.S. federal agency for insurance, reported in a statement that the agreement between the two entities was closed in the last few hours, and that “JPMorgan Chase Bank to assume all deposits and substantially all of the assets of First Republic Bank.”
As part of the transaction, the 84 First Republic offices in eight states will reopen this Monday. as branches of JPMorgan Chase.
“All depositors of First Republic Bank will become. JPMorgan Chase Bank depositors.” says the FDIC statement.
173 billion in loans
As of April 13, First Republic Bank had approx. $229.1 billion in total assets. and another $103.9 billion in total deposits.
FRB currently has about $173 billion in loans30 billion in securities and $92 billion in deposits, which “will continue to be insured by the FDIC”.
For his part, JPMorgan Chase CEO Jamie Morgan stressed in a press release the. financial strength of the bank he presides.which allowed them to “develop an offer to execute the transaction in a manner that minimizes costs to the Deposit Guarantee Fund”.
“Customers do not need to change their banking relationship in order to retain their deposit insurance coverage up to the applicable limits,” the U.S. federal agency further states.
It also reports that the agency and the acquiring bank have entered into “a loss-sharing transaction on single-family, residential and commercial loans it purchased from the former First Republic Bank.”
FDIC as Receiver and JPMorgan Chase Bank Will share in losses and possible recoveries. of the loans covered by that loss-sharing agreement, and that through that process “maximize the recovery of the assets by keeping them in the private sector.”
The U.S. federal agency also indicates that the sale of First Republic to the country’s largest bank “involved a process of highly competitive bidding and resulted in a transaction consistent with the minimum cost requirements of the Federal Deposit Insurance Act.”
According to FDIC calculations, the estimated cost of the transaction to the FDIC “will be in the range of approximately $13 billion“, although the final figure will be determined when this insurance fund completes receivership.
In electronic trading prior (09:08 GMT) to the opening of the New York Stock Exchange, the shares of the First Repblic, were trading at $3.51, down 43.30%, while JPMorgan Chase shares were up 0.87% at $138.24.