Wednesday, 3 May, 2023, Bengaluru, India
Amid the ongoing banking crisis in the greatest economy in the world, another US bank has fallen. First Republic Bank was the third significant US lender to fall on Monday in less than two months. First Republic Bank joins the list after two other banks made the list this year already. First Republic is the latest in the list, while the previous ones to succumb to the economic crisis were Signature Bank and Silicon Valley Bank.
The California Department of Financial Protection and Innovation took matters into its responsible hands and seized operations of the First Republic Bank, which was later sold to JP Morgan Chase and Co. after a deal was finalized between the parties. The California regulators mentioned in a statement that JP Morgan will take most of First Republic’s assets and all the deposits, including uninsured ones.
It should be mentioned that PNC Financial Services Group and Citizens Financial Group Inc., who had both made final offers on Sunday in a regulator-run auction, were also interested in buying First Republic Bank along with JP Morgan.
The private wealth management company used to provide personalized banking, investment management, trust, and brokerage services to high-net-worth individuals, families, and businesses. After it was founded in 1985 in San Francisco, First Republic Bank spread its operations in different regions across the United States, including New York, Boston, Los Angeles, and Miami. The recent economic crisis was too much for the First Republic Bank to deal with. It was also reported that the FDIC estimated that the cost of the Deposit Insurance Fund would be around $13 billion.
The Chairman and CEO of JP Morgan Chase, Jamie Dimon, said, “Our government invited us and others to step up, and we did.” He also added, “Our financial strength, capabilities, and business model allowed us to develop a bid to execute the transaction in a way to minimize costs to the Deposit Insurance Fund.”
Following the deal with JP Morgan Chase and Co., all of First Republic Bank’s 84 offices in the United States will reopen as JP Morgan Chase Bank branches.
Sources – India Today
