FDIC accepts JPMorgan Chase Bank bid to buy First Republic Bank

The Federal Deposit Insurance Corporation (FDIC) has accepted a bid from JPMorgan Chase Bank to assume all deposits of First Republic Bank, the California Department of Financial Protection and Innovation (DFPI) announced early Monday morning.

The San Francisco-based bank has struggled since the collapse of Silicon Valley Bank and Signature Bank in early March, and it was widely seen as the bank most likely to collapse next.

“The DFPI appointed the Federal Deposit Insurance Corporation (FDIC) as receiver of First Republic Bank. The FDIC has accepted a bid from JPMorgan Chase Bank, National Association, Columbus, Ohio, to assume all deposits, including all uninsured deposits, and substantially all assets of First Republic Bank,” a press release from DFPI said.

The agreement was reached and announced before U.S. stock markets opened Monday.

JPMORGAN, PNC BID TO BUY FIRST REPUBLIC BANK AMID POSSIBLE FDIC TAKEOVER: REPORT

Investors and depositors grew increasingly worried First Republic Bank may not survive as an independent entity due to its high amount of uninsured deposits and exposure to low-interest rate loans. But, the purchase agreement includes all uninsured deposits and substantially all its assets. 

“The DFPI took action pursuant to California Financial Code section 592, subdivisions (b) and (c), specifically ‘conducting its business in an unsafe or unsound manner’ and being in a ‘condition that … is unsafe or unsound’ to transact banking business,” the release said.

FDIC SETS SUNDAY DEADLINE FOR FIRST REPUBLIC BANK BIDS: REPORT

It added: “As of April 13, 2023, First Republic Bank, based in San Francisco, had total assets of approximately $229.1 billion and total deposits of approximately $103.9 billion. Its deposits are federally insured by the FDIC subject to applicable limits.”

First Republic Bank’s stock closed at $3.51 on Friday. Last year, it traded at $170 a share.

The banking franchise was the envy of most of the industry and its clients mostly included the rich and powerful, who rarely defaulted on their loans.

Many of the bank’s deposits, however, were uninsured as they were above the $250,000 limit set by the FDIC. If First Republic were to fail, its depositors might not get all their money back, worrying analysts and investors alike.

CLICK HERE TO READ MORE ON FOX BUSINESS

These fears materialized in April when the bank’s recent quarterly results showed that depositors pulled more than $100 billion out of the bank as the banking crisis was affecting Silicon Valley Bank and New York’s Signature Bank.

The Associated Press contributed to this report.

  Read More 

Advertisements