JPMorgan acquires First Republic Bank for $10.6 billion

The financial crisis in USA, which began with the bankruptcy of Silicon Valley Bank (SVB), has brought a new victim, as reported by the newspaper El País (Spain). In the early hours of this Monday, May 1, the Federal Deposit Insurance Corporation (FDIC) announced the intervention of First Republic Bank and a sale agreement to JPMorgan, the first bank in the United States.

“Our Government invited us and others to step forward, and we have done so (…). Our financial strength, capabilities and business model have enabled us to prepare an offer to execute the transaction in a manner that minimizes costs to the FDIC,” Jamie Dimon, president and CEO of FDIC, said in a statement. JPMorgan Chase.

This way, JP Morgan will pay US$10.6 billion for the entity, after its balance sheet has been cleaned up. It will take over all of your deposits and most of your assets. The stock market received this purchase as good news for the entity, so its shares rose more than 3% at the opening of Wall Street. While the First Republic titles were suspended from trading and have become worthless.

What was the situation of the First Republic?

First Republic is a regional bank founded in 1985 with 84 branches spread across eight states of the country, it was ranked 14th in that nation by asset size at the end of 2022 and is the second largest drop in the history of USAbehind Washington Mutual, which was also acquired by JP Morgan in 2008, according to El País. The last week of April suffered a collapse in the stock market after reporting that in March it went through a massive flight of deposits.

The entity’s clients withdrew US$102 billion from their accounts in the first quarter of 2023 despite the fact that JP Morgan and other banking entities injected US$30 billion in deposits, for which the bank had to request financing from the Federal Reserve (Fed). None of the entity’s efforts had a positive impact.