RIYADH: US regulators said on Monday that First Republic Bank has been seized and a deal agreed to sell the bank to JPMorgan Chase & Co, in what is the third major US institution to fail in two months.
The Wall Street major bank will take most of First Republic’s assets and all the deposits, including uninsured ones, the regulators said in a statement.
JPMorgan was one of several interested buyers including PNC Financial Services Group, and Citizens Financial Group Inc, which submitted final bids on Sunday in an auction being run by US regulators, sources familiar with the matter said over the weekend.
The California Department of Financial Protection and Innovation announced early on Monday it had taken possession of First Republic and that the Federal Deposit Insurance Corp. would act as its receiver.
The FDIC estimated in a statement that the cost to the Deposit Insurance Fund would be about $13 billion. The final cost will be determined when the FDIC terminates the receivership.
First Republic had total assets of $229.1 billion as of April 13 and $103.9 billion worth of deposits, the FDIC statement said.
“Our government invited us and others to step up, and we did,” said Jamie Dimon, chairman and CEO of JPMorgan Chase. “Our financial strength, capabilities and business model allowed us to develop a bid to execute the transaction in a way to minimize costs to the Deposit Insurance Fund.”
The rescue comes less than two months after Silicon Valley Bank and Signature Bank failed amid a deposit flight from US lenders, forcing the Federal Reserve to step in with emergency measures to stabilize markets. Those failures came after crypto-focused Silvergate voluntarily liquidated.
The failed bank’s 84 offices in eight states will reopen as branches of JPMorgan Chase Bank from Monday, according to the statement.