JPMorgan buys First Republic Bank
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US regulators introduce temporary administration at First Republic Bank — it will be bought out by the country’s largest bank, JPMorgan. This is reported by Bloomberg.
Photo: nytimes.com 7
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What is known
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.
Guaranteed deposits will be about $250 thousand – the 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 country’s largest bank, even more so than US officials have tried to avoid in the past.
Read: American First Republic Bank is preparing to be transferred to foreign management — Reuters
Due to regulatory restrictions in the US, the size of JPMorgan and its existing stake in the US deposit base will not allow it to expand its deposit base further under normal circumstances. And leading Democratic legislators and the Biden administration oppose consolidation in the financial industry and other sectors.
Let’s remind
First Republic, which announced its first-quarter earnings, said it plans to reduce its balance sheet and cut expenses by reducing executive compensation, reducing office space and laying off 20% to 25% of employees in the second quarter.
Read also: Why are banks going bankrupt again and who will actually pay for it?
Against the background of the collapse of two American banks, Silicon Valley Bank (SVB) and Signature Bank, clients began to massively withdraw funds from First Republic, and the S&P Global Ratings and Fitch Ratings agencies lowered the bank’s ratings to the level of the speculative category.
It is worth noting that Silicon Valley Bank and Signature Bank had a large number of uninsured deposits, like First Republic, which gave rise to fears that clients would withdraw their money.
Source: Ministry of Finance
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