First Republic Bank is the third major US bank to fail this year.
Banking giant JPMorgan Chase has acquired First Republic Bank after submitting a bid to buy on April 29.
First Republic was seized by the California Department of Financial Protection and Innovation after earlier rescue attempts failed. The bank closed on May 1 and entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) as the receiver.
Much like Silicon Valley Bank, First Republic catered heavily toward the tech space and took a crypto-friendly approach to lending.
Read more: Silicon Valley Bank collapses, marking the biggest bank failure since 2008 crisis
JPMorgan will assume all assets of First Republic Bank, including uninsured deposits. As of April 13, 2023, First Republic had approximately $229.1 billion in total assets and $103.9 billion in total deposits.
84 First Republic offices will reopen as JPMorgan Chase Bank from today. All First Republic depositors will become depositors of JPMorgan Chase Bank and will have full access to all of their deposits.
A loss-sharing agreement was also established between the FDIC and JPMorgan Chase for residential and commercial loans acquired by FRB.
The press release outlined: “The FDIC as receiver and JPMorgan Chase Bank, National Association, will share in the losses and potential recoveries on the loans covered by the loss–share agreement. The loss–share transaction is projected to maximize recoveries on the assets by keeping them in the private sector. The transaction is also expected to minimize disruptions for loan customers. “
First Republic Bank has struggled since March following the collapses of Signature, Silicon Valley and Silvergate banks, but trouble really hit on April 26 when news of “eventual government receivership” broke.
On April 24, the bank reported a $100 billion plunge in deposits, causing shares to slump by 50% the following day. By Friday, three days before the acquisition, First Republic shares lost 97%.
Over the same weekend, the price of Bitcoin pumped to $29,800, again suggesting the crypto is performing as intended. At the time of writing, BTC is trading at approximately $28,570.
Disclaimer: CryptoPlug does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.
