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- The Federal Deposit Insurance Corp has named JPMorgan Chase as the buyer of First Republic Bank.
- JPMorgan will take over $229 billion in assets and $103 billion in total deposits from the troubled bank.
The U.S. Federal Deposit Insurance Corporation (FDIC) has named American banking giant JPMorgan Chase as the buyer of First Republic Bank. The troubled bank was closed by the California Department of Financial Protection and Innovation on May 1 after efforts to rescue the bank failed.
JPMorgan Chase to take over $330 billion in assets
According to a press release from the FDIC, California’s financial regulator closed First Republic and appointed the federal agency as the bank’s receiver. The FDIC has entered into a purchase and assumption agreement with JPMorgan Chase Bank. The latter will assume all the troubled financial institution’s deposits and the majority of its assets as well.
As per the bid submitted by JPMorgan for acquiring the assets of First Republic Bank, the latter’s 84 offices in eight states across the country will reopen as branches of JPMorgan on 1 May. The FDIC stated that all depositors of First Republic will be converted into depositors of JPMorgan. Moreover, they will have full access to their deposits.
The FDIC clarified that it will clarify all deposits after transactions are concluded. JPMorgan will take over a whopping $229.1 billion in assets and $103 billion in total deposits from First Republic Bank. In addition to assuming all the struggling bank’s deposits, JPMorgan has agreed to purchase substantially all of its assets. The bank was named as First Republic’s buyer after a highly competitive bidding process, which was judged on the basis of the least-cost requirements of the Federal Deposit Insurance Act. First Republic’s resolution will cost an estimated $13 billion to FDIC’s Deposit Insurance Fund.
In addition to the transfer of assets and deposits, JPMorgan also entered into a loss-sharing transaction for the residential and commercial loans it had acquired from First Republic. As per this agreement, the bank will share the losses and potential recoveries on said loans with the FDIC. Furthermore, all of First Republic’s Qualified Financial Contracts will be assumed by JPMorgan.
