First Republic Bank seized by US regulators

In a move to prevent a potential collapse of First Republic Bank, regulators have seized the bank and sold most of its operations to JPMorgan Chase & Co. The deal will see JPMorgan assume all of First Republic’s $92 billion in deposits, insured and uninsured, as well as buy most of the bank’s assets, including $173 billion in loans and $30 billion in securities. The Federal Deposit Insurance Corp. (FDIC) will share losses with JPMorgan on First Republic’s loans, and JPMorgan will receive $50 billion in financing from the FDIC.

First Republic, based in San Francisco, lost $100 billion in deposits following the collapse of fellow Bay Area lender Silicon Valley Bank in March. Three of the four largest-ever U.S. bank failures have occurred in the past two months, with First Republic being the second-largest bank to fail in U.S. history. JPMorgan’s acquisition of First Republic makes it the third major U.S. institution to fail since March this year.

The deal will allow for an orderly failure of First Republic and avoid regulators having to insure all deposits, as they had to do when two other banks failed last month. First Republic Bank shares tumbled 43.3% in premarket trading before being halted, while JPMorgan shares rose 2.7%. JPMorgan was one of several interested buyers, including PNC Financial Services Group and Citizens Financial Group Inc, which submitted final bids on Sunday in an auction run by U.S. regulators.

By Joshi

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