JPMorgan buys First Republic Bank assets – 05/01/2023 – Market

JPMorgan Chase & Co said on Monday it would buy most of First Republic Bank after US regulators intervened at the bank over the weekend, marking the bankruptcy of the third-largest US creditor within two months.

As part of the deal, JPMorgan will make a $10.6 billion payment to the FDIC (US Deposit Control Agency) as part of the deal to buy most of the San Francisco-based lender’s assets.

The bank also signed a loss-sharing agreement with the FDIC on individual, residential and commercial loans it purchased, but will not accept First Republic Bank corporate debt or preferred stock.

The deal, which followed an auction over the weekend, allows for an orderly bankruptcy of the First Republic and avoids the need for regulators to insure all deposits, as they had to do when two other banks failed last month. It also makes the biggest US bank even bigger.

First Republic came under intense pressure after it disclosed last week that it had experienced more than $100 billion in outflows in the first quarter and was exploring options.

It also renewed stress on the banking sector, which was reeling from the closure of Silicon Valley Bank and Signature Bank in March, while Swiss lender Credit Suisse was bought by rival UBS in a state-engineered takeover.

The US Treasury Department said it is encouraged that the First Republic Bank crisis has been resolved at the lowest cost to its deposit insurance fund, and believes the US banking system remains sound and resilient, a senior official said. spokesperson on Monday morning.