On Monday, US regulators announced the seizure of First Republic Bank and its subsequent sale to JPMorgan Chase & Co, marking the third major US financial institution to fail in the past two months.
Several potential buyers, including PNC Financial Services Group and Citizens Financial Group Inc, submitted final bids on Sunday in an auction overseen by US regulators. However, JPMorgan emerged as the winning bidder.
The California Department of Financial Protection and Innovation took possession of First Republic early on Monday, with the Federal Deposit Insurance Corp. (FDIC) acting as its receiver.
The FDIC estimates that the cost to the Deposit Insurance Fund will amount to approximately $13 billion, with the final cost determined upon the termination of the receivership.
As of April 13, First Republic held total assets worth $229.1 billion and deposits amounting to $103.9 billion. JPMorgan Chase’s Chairman and CEO, Jamie Dimon, stated that the bank’s financial strength, capabilities, and business model allowed it to submit a bid that would minimize costs to the Deposit Insurance Fund.
This development follows the recent failures of Silicon Valley Bank and Signature Bank, both of which experienced a significant withdrawal of deposits from US lenders. These events prompted the Federal Reserve to implement emergency measures to stabilize the market. Additionally, the crypto-focused Silvergate Bank voluntarily liquidated.
The 84 offices of the failed bank, located across eight states, will reopen as branches of JPMorgan Chase Bank starting Monday, according to the regulators’ statement.