The California Department of Financial Protection and Innovation (DFPI) said on May 1 that it had closed First Republic Bank and placed it in receivership. It is the third bank in the United States to fail in two months. Buoyed by the news, First Republic Bank shares plunged in early US trading hours, widening the decline to 50%.
This is the FDIC’s latest effort to boost consumer confidence in the banking system. Three US banks have failed in the past six weeks. Silicon Valley Bank and Signature Bank were both taken over by the FDIC in April after both suffered runs. Their failures have fueled speculation about the health of US regional banks, particularly those whose deposit bases are largely uninsured.
DFPI appointed the Federal Deposit Insurance Corporation (FDIC) as receiver of First Republic Bank. First Republic currently has total assets of approximately $229.1 billion and deposits of approximately $103.9 billion. The FDIC accepts JPMorgan Chase’s offer for First Republic Bank.
In addition to assuming all deposits (including uninsured deposits), and applicable financial contracts, JPMorgan agreed to purchase substantially all of First Republic’s assets. JPMorgan is also assuming some of First Republic’s liabilities and expects a one-time after-tax gain of about $2.6 billion. JPMorgan said it would maintain a very adequate CET1 ratio.
The FDIC issued a statement saying that the First Republic Bank office will reopen as a branch of JPMorgan Chase & Co. The bank reopened 84 offices in 8 states for the 1st time in the US. All depositors of the bank will become JPMorgan depositors and have access to all their deposits.
The statement stated that the bank’s deposits will continue to be insured by the FDIC. Customers do not need to change their banking relationship. Their deposits are safe and they can withdraw money easily. First Republic Bank customers should continue to use their current branches until notified by JPMorgan Chase Bank National Association. Changes to the banking system have now been completed to allow other branches of JPMorgan Chase Bank National Association to also handle First Republic accounts.
The FDIC said in a statement that it was pleased to be able to resolve First Republic’s bankruptcy without using the FDIC’s emergency powers. It is also likely that the banking system is not resilient enough to regulatory failures and should plan for these bank failures, focusing on strict capital requirements and an effective resolution framework.
After a period of struggle, what is the end of First Republic Bank?
California’s Agency for Financial Protection and Innovation (DFPI) said on May 1 that it closed and took over First Republic Bank and sold its assets to JPMorgan Chase. It was the third US bank to fail in two months. In the previous 6 weeks, Silicon Valley Bank (SVB, also translated as Silicon Valley Bank, Silicon Valley Bank) and Signature Bank (Signature Bank) were taken over by the FDIC in April. Their collapse has fueled speculation about the health of US regional banks.
What did JP Morgan take from First Republic?
It assumed all of First Republic’s deposits (including uninsured deposits), qualified financial contracts, and agreed to purchase substantially all of First Republic’s assets. JPMorgan also assumed some of First Republic’s liabilities. JPMorgan said it would maintain a very adequate CET1 ratio.