The California Department of Financial Protection and Innovation appointed the Federal Deposit Insurance Corporation as receiver for the First Republic and said it had accepted an offer from JPMorgan Chase and others to guarantee all deposits, following the failed efforts to bail out ailing bank.
“To protect depositors, the FDIC is entering into a repurchase and acquisition agreement with JPMorgan Chase, the National Association, and Columbus, Ohio to take over all deposits and assets of First Republic Bank,” the FDIC said. in a press release.
California’s Department of Financial Protection and Innovation said JPMorgan would protect “all deposits, including those that are unsecured, and the majority of assets.”
The First Republic has failed to come up with a workable bailout and revealed last week that it lost more than $100 billion in deposits in the first quarter, sending its shares plummeting.
The federal government intervened with the agency responsible for guaranteeing bank deposits, and the United States Department of the Treasury and the Federal Deposit Insurance Corporation (FDIC), an agency responsible for guaranteeing bank deposits, contacted 6 banks to verify the extent of their interest in the purchase of First Republic property.
California’s Department of Financial Protection and Innovation said earlier Monday that ownership of First Republic Bank had been transferred to it and the Federal Deposit Insurance Corporation had appointed a receiver to head the bank.
“Our government and others have asked us to take a step forward, and we have,” said Jamie Dimon, chairman and CEO of JPMorgan Chase. “.
And 84 First Republic branches in eight states will reopen as branches of JPMorgan Chase, according to the FDIC.
The Federal Deposit Insurance Corporation estimated in a statement that the cost of the deposit insurance fund would be around $13 billion. The final cost will be determined when the Foundation terminates the receivership.
Bankruptcy of the second largest bank in American history
With assets of $233 billion at the end of March, the First Republic is the second largest failed bank in US history – excluding investment banks such as Lehman Brothers – after the Washington bankruptcy. Mutual in 2008.
The deal to buy First Republic Bank comes less than two months after Silicon Valley and Signature banks collapsed amid a wave of deposit flight from US banks, forcing the Federal Reserve (US central bank) to intervene with emergency measures to maintain market stability.
These banks collapsed after Silvergate Bank, which focused on cryptocurrencies, voluntarily liquidated its assets
The Fed’s latest report concluded that the Fed “did not seriously appreciate critical shortcomings in bank management, liquidity and interest rate risks” during the doubling of Silicon Valley assets in 2019. -2021, in the midst of the high-tech boom.
The report calls for more banking oversight, acknowledging its failures in relation to the collapse of the Silicon Valley bank last month.
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