First Republic Bank is being liquidated: JPMorgan is buying it

US regulators introduce a temporary administration at First Republic Bank – it will be bought by the country’s largest bank, JPMorgan.

It is reported Bloomberg.

JPMorgan will “assume all deposits, including all uninsured deposits, and substantially all assets” of First Republic, the California Department of Financial Protection and Innovation said in a statement. The Federal Deposit Insurance Corporation (FDIC) has been appointed liquidator of the bank.

Deposits will be guaranteed up to $250,000 – regulators did not grant First Republic the same exemption from systemic risk that was applied in the case of SVB.

The deal makes JPMorgan, the nation’s largest bank, even bigger, something US government officials have tried to avoid in the past.

Due to US regulatory restrictions, JPMorgan’s size and its existing share of the US deposit base would not normally allow it to expand its deposit base further. And top Democratic lawmakers and the Biden administration oppose consolidation in the financial industry and other sectors.

Like other financial institutions, First Republic Bank found itself in a difficult position when the US Federal Reserve raised interest rates to fight inflation. This negatively affected the value of bonds and loans that the bank bought at low rates.

Eleven U.S. banks tried to keep First Republic afloat by pledging $30 billion in new deposits on March 16, with JPMorgan, Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. allocated 5 billion dollars each.

Meanwhile, depositors began to withdraw their capital from the bank en masse. The result was a hole in capital, and in April the bank published its first-quarter report and announced its attempt to sell assets and develop a rescue plan.

We remind you:

U.S. regulators are in talks with at least three major banks, JPMorgan, Citizens and PNC, to try to save First Republic, all of which are bidding to buy all or part of the bank.