First Republic has been taken over by JPMorgan following its seizure by a financial regulator in California.

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    First Republic has been taken over by JPMorgan following its seizure by a financial regulator in California.

  • JPMorgan obtained all of First Republic's deposits and a "significant majority of assets." This news caused a 2.6% increase in JPMorgan's shares during premarket trading.
  • This followed the takeover of First Republic by the Californian financial regulator, marking the third bank failure in the United States since March.
  • Last month, First Republic caused a fresh wave of concern when it disclosed that it had lost more deposits in the first quarter than initially anticipated.
According to a statement, JPMorgan Chase obtained all of First Republic's deposits, including those that were uninsured, as well as a "significant majority of assets." As a result of this development, JPMorgan's shares increased by 2.6% during premarket trading.

According to a statement, JPMorgan Chase obtained all of First Republic's deposits, including those that were uninsured, as well as a "significant majority of assets." As a result of this development, JPMorgan's shares increased by 2.6% during premarket trading.


The California Department of Financial Protection and Innovation has announced that it has taken control of First Republic, appointing the Federal Deposit Insurance Corporation (FDIC) as the receiver. The FDIC has approved JPMorgan Chase's bid for the bank's assets, which includes all of its deposits, including uninsured deposits, and a significant majority of its assets. The FDIC confirmed that all of First Republic's 84 branches in eight states will be reopened as branches of JPMorgan Chase, with depositors gaining full access to their deposits.

JPMorgan Chase's CEO, Jamie Dimon, stated that the acquisition minimized costs to the Deposit Insurance Fund and modestly benefited the company overall. The bank's acquisition of First Republic is accretive to shareholders and complements its existing franchise, as well as advancing its wealth strategy.

First Republic has been in the spotlight since the sudden collapse of Silicon Valley Bank in March. The bank catered to the needs of wealthy coastal Americans and was known for offering low-rate mortgages in exchange for cash deposits. However, the bank's clients withdrew over $100 billion in deposits following the collapse of Silicon Valley Bank, making First Republic the weakest link in the US banking system. The bank had to borrow heavily from the Federal Reserve facilities to maintain operations, leading to pressure on its margins. First Republic CEO, Michael Roffler, attempted to portray an image of stability after the events of March, stating that deposit outflows had slowed in recent weeks. However, the stock price fell sharply after the company disavowed its previous financial guidance.

First Republic's advisors had hoped to persuade the largest US banks to assist the bank. One of the plans circulated involved asking banks to pay above-market rates for bonds on First Republic's balance sheet, which would enable it to raise capital from other sources. But the banks could not agree on a rescue plan, and regulators took action, ending the bank's 38-year run. First Republic's shares were down by 97% this year as of Friday's close.


Location: United States

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