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Investment banking giant JPMorgan Chase will assume over $330 billion worth of deposits and assets of struggling First Republic Bank.
According to a May 1 statement, the Federal Deposit Insurance Corporation (FDIC) said it was appointed as the receiver of the First Republic Bank after it was closed by California’s Department of Financial Protection and Innovation.
“All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, National Association, and will have full access to all of their deposits.”
First Republic Bank is the third major U.S. bank to collapse in recent months.
Meanwhile, the FDIC confirmed that it would continue to insure deposits of the bank, adding that First Republic Bank customers do not have to change their banking relationship to retain their deposit insurance.
The regulator noted that the failed bank’s 84 offices in eight states would reopen as branches of JPMorgan during regular business hours today.
The FDIC said it entered into a loss-share transaction with JPMorgan. According to the agency, the transaction would minimize the disruptions for the failed bank’s customers and help maximize recoveries on the assets by keeping them in the private sector.
“The FDIC estimates that the cost to the Deposit Insurance Fund will be about $13 billion.”
Last week, stocks of First Republic Bank rapidly plunged after news that its deposits fell by 40% in 22 days. At the time, industry watchers speculated that the bank would be the next victim of the banking crisis that had already claimed Silicon Valley Bank and Signature Bank.
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