The New York Times reports that First Republic Bank, the third significant American institution to fail in the past two months, was taken over by reg
The New York Times reports that First Republic Bank, the third significant American institution to fail in the past two months, was taken over by regulators early on Monday and had the majority of its activities sold to JPMorgan Chase Bank.
Before the U.S. stock market was scheduled to open on Monday, the sale of First Republic was announced.
Regulators worked overtime over the weekend to finalize the agreement that would see JP Morgan accept $173 billion in loans and around $30 billion in securities from San Francisco-based First Republic Bank, including $92 billion in deposits. Neither the bank’s corporate debt nor preferred shares will be taken over by the financial behemoth.
According to a statement from the FDIC, JPMorgan would “assume all of the deposits and virtually all of the assets of First Republic Bank.” The regulator estimated that in order to cover First Republic’s losses, the FDIC’s insurance fund would need to disburse nearly $13 billion.
According to the FDIC, JPMorgan will reopen its 84 First Republic branches on Monday during regular business hours, giving customers complete access to their deposits.
Following the failure of Silicon Valley Bank in March, First Republic, the second-largest bank to fail in American history, lost $100 billion in deposits, according to The Wall Street Journal.
The Journal claims that a recent week’s earnings announcement caused the bank’s stock to drop by close to 50% in a single day. The price of First Republic’s stock last week was $3.51 as opposed to $115 on March 8.
Since March, three of the four largest U.S. bank failures have taken place. The past two months have seen the failure of First Republic, Silicon Valley Bank, and Signature Bank, all of which had assets of around $233 billion at the end of the first quarter.
