First Republic bankruptcy is the 2nd largest of US banks – 02/05/2023 – Market

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JPMorgan takes over yet another failed bank

After swaying for a few weeks, the San Francisco regional bank First Republic went bankrupt this Monday (1st), when US authorities intervened in the institution and sold most of its operation to JPMorgan Chase.

in numbers: JPMorgan will pay $10.6 billion to the FDIC (guarantee fund in the US, analogous to the FGC in Brazil) as part of the agreement to buy most of the assets of the First Republic.

• he will assume $92 billion in deposits that today are in the regional bank, in addition to $173 billion in loans and $30 billion in debt securities.

• In return, JPMorgan and the FDIC will share the losses with the bankrupt bank’s “bad” assets, with the agency –which has its cash supplied by financial institutions– estimating that the losses will add up to US$ 13 billion.

Remember: First Republic was the regional bank that felt the hardest hit since the bankruptcy of SVB (Silicon Valley Bank) and Signature Bank in early March.

• Its stock has been on a roller coaster ride ever since, and the institution looked as if it might survive when a consortium of banks secured $30 billion in deposits.

• The crisis worsened again last week, when First Republic said the bank run at the end of the first quarter had taken $100 billion in deposits, raising market fears about its financial health.

bankruptcy of the regional bank, which had US$233 billion in assets at the end of March, is the second largest in American history, behind only the collapse of Washington Mutual –another purchased by JPMorgan– in the 2008 crisis.

• SVB and Signature Bank follow closely.

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‘Data that feeds our tecs matters’

“We live in racist societies. As we know that this ideology is part of our society, we need to know that it is the information base for our technology, these tools are not neutral. The data that is feeding our technologies matters.”

This was the response of activist Ayọ Tometi, co-founder of the Black Lives Matter (BLM) movement, to the question about the advancement of AI and the risk of relying 100% on this type of technology.

• She spoke with Maju Coutinho, journalist and TV Globo presenter, on the first day of the Web Summit*.

What else did Ayo say

The importance of social networks for BLM

Our voices weren’t being heard in traditional media, so we created our own media. I’m a millennial, I grew up with the internet, so I used the networks to tell my story and the place where I was born.

How platforms drive hate speech
Some stories have more space in the media, these platforms (big techs) prefer some types of voices. Our voices are lowered sometimes, that’s a problem. We cannot have algorithms working against our actions.

We are living in a historic moment and we can be on the right or wrong side of history. Everything we are doing matters and there is no such thing as neutrality.

Emergence of extremist discourses

We have to wonder why this is being brought up now. That’s because people like us have the courage to speak up and express ourselves, to demand equality and justice for our lives. It’s no coincidence that these regressive movements are emerging now to say that our voice doesn’t matter.

*O reporter traveled at the invitation of the event.

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Mototaxis and tuk-tuks gain traction

The São Paulo City Hall’s veto of tuk-tuks (tricycles) by the startup Grilo has heated up the debate on the use of vehicles other than the car for individual passenger transport in the country.

Understand the dispute: São Paulo City Hall prohibits motorcycle taxi services in the city and interpreted that Grilo’s tuk-tuks also fit into this category.

• She claims that the service offers risks: on the motorcycle, the passenger also needs to have some ability to balance, and carelessness can lead to serious accidents. A working group is still debating the issue.

• The companies say that the modal is safe. 99 says that 99.9% of races end without incident.

In numbers: only in Rio, where the municipal administration also tried to ban mototaxi apps –and the companies operate with an injunction–, are 30 thousand drivers, according to municipal management.

• 99Moto, 99’s motorcycle taxi service, completed one year of operation in April and serves more than 3,000 municipalities. During the period of operation, it has already transferred R$ 600 million to partner motorcyclists and transported 1.3 million people.

• Grilo, which has been operating in Porto Alegre since July 2020, has 45,000 registered users and has made 67,000 trips since launch. Uber Moto, launched at the end of 2020, currently serves 170 Brazilian cities.

What explains the popularization of these types of transport:

• Price: races tend to be more affordable than traditional transport, by car.

• Routes: these vehicles are able to escape traffic and travel in narrow streets or even in places generally avoided by cars due to insecurity. The 99 says that 66% of races are made in peripheral neighborhoods.

• Ease of use for drivers: they can combine the activity of delivering food or parcels with transporting passengers – which generates a 30% to 50% higher return, according to 99.

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Government targets tax havens

The government published an MP (provisional measure) on Sunday that targets more than R$1 trillion (US$200 billion) in assets of individuals abroad.

In numbers: As of 2024, earnings obtained abroad will be subject to Income Tax in two collection ranges, with rates of up to 22.5%.

• From R$6,000 to R$50,000, 15% is charged on earnings.

• From BRL 50 thousand, the percentage rises to 22.5%.

• The rate is zero on annual earnings of up to R$6,000.

These amounts apply to financial investments, profits and dividends from controlled entities and assets and rights present in the so-called trusts.

The idea of ​​the government is to put an end to the use of tax havens by individuals residing in the country.

• In the calculations of the Ministry of Finance, the measures have the potential to collect R$ 3.25 billion for this year, about R$ 3.59 billion for 2024 and R$ 6.75 billion for 2025.