Banking: US regulator seizes FRB’s $229 bn assets; to sell to JP Morgan
Virendra Pandit
New Delhi: United States regulator, the California Department of Financial Protection and Innovation (DFPI), said on Monday it has shut down First Republic Bank and agreed to a deal to sell all of its deposits and assets, worth USD 229.1 billion, to JP Morgan Chase & Co and National Association.
In the last couple of months, three major crisis-ridden American banks—Silicon Valley Bank, Signature Bank, and First Republic Bank (FRB)—failed, causing a potential meltdown of banks in other countries. The FRB lost some USD 100 billion in deposits.
JPMorgan Bank was one of several interested buyers including PNC Financial Services Group, and Citizens Financial Group Inc, which submitted final bids on Sunday in an auction the US regulators ran, the media reported on Monday.
A deal for the FRB with total assets of USD 229.1 billion as of April 13 came less than two months after Silicon Valley Bank and Signature Bank failed amid a deposit flight from US lenders, forcing the FRB to step in with emergency measures to stabilize markets. Those failures came after crypto-focused Silvergate voluntarily liquidated, the reports said.
“The Federal Deposit Insurance Corporation (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,” the statement said.
Eleven banks, including Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley, had deposited USD 30 billion into the FRB to help it have time for finding solutions. The crisis at this US bank followed the withdrawal of deposits by wealthy clients.
Swift rate hikes spelled trouble for some businesses to repay loans, triggering loss risks for lenders already reeling under recession fears.
A deal for First Republic with total assets of USD 229.1 billion forced the Federal Reserve to step in with emergency measures to stabilize markets.
The FRB’s 84 branches in eight US states will reopen on Monday as branches of JPMorgan Chase Bank.
On Friday last week, the troubled bank’s stock closed 43 percent lower and hit a record low of USD 2.99 apiece.
