Banking giant JPMorgan will take over the assets of the troubled First Republic Bank after its seizure by the California Department of Financial Protection and Innovation.
The American banking giant JPMorgan Chase is set to acquire First Republic Bank’s (FRB) assets after early efforts to rescue it failed. JPMorgan and multiple other banks submitted a bid to acquire the assets of troubled FRB on April 29.
The California Department of Financial Protection and Innovation closed FRB on May 1 and entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) as the receiver. The FDIC then entered into a purchase and assumption agreement with JPMorgan to protect depositors.
JPMorgan will assume all assets of First Republic Bank, including uninsured deposits. FRB currently has $229.1 billion in assets and $103.9 billion in deposits.
As part of the transfer, 84 locations of First Republic Bank in eight states will reopen as JPMorgan Chase. All depositors of FRB will become a part of JPMorgan and have access to their total deposits insured by FDIC. Customers can continue to avail of banking services at the current branch until they receive any change notification from JPMorgan.
Apart from the transfer of assets, a loss-sharing agreement was also agreed upon between the FDIC and JPMorgan for residential and commercial loans acquired by the FRB. The losses and any recoveries on the loans covered by the loss-share agreement will be split between the FDIC, in its capacity as receiver, and JPMorgan.
Related: Bitcoin price jumps in the wake of First Republic Bank price crash
The trouble started brewing for FRB on April 26 when the news about a government receivership surfaced. The shares of the bank started tanking from the announcement and within hours it was down by 20%. The days following the announcement became even more volatile for the bank before the regulators eventually closed the bank.
FRB joined the likes of Silicon Valley Bank and Signature Bank to become the third bank to collapse in 2023.
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