INVC NEWS
Washington, DC ,
In the latest turn of events, First Republic Bank has become the third US bank to sink in the last two months, putting hundreds of investors at risk of ruin. The Federal Deposit Insurance Corporation (FDIC) of America announced on Monday that the bank has been shut down by local regulators, and JPMorgan Chase has taken control of most of the bank’s assets and all deposits. This news has sent shockwaves through the financial industry and has left many wondering what caused the downfall of yet another bank.
Auction and Acquisition
According to reports, the US regulator had auctioned First Republic Bank on Sunday, in which PNC Financial Group, JP Morgan Chase & Co, and Citizens Financial Group participated. In the end, JP Morgan Chase & Co succeeded in acquiring most of First Republic Bank’s assets. Under the post-auction settlement, 84 First Republic Bank offices in eight US states will reopen as JPMorgan Chase Bank, National Association branches beginning today.
Depositors’ Access and FDIC Insurance Coverage
All depositors of First Republic Bank will become JPMorgan Chase Bank, National Association depositors and will have full access to all their deposits. The FDIC has reassured customers that “customers’ investments will still continue to be FDIC insured, and customers are not required to change their banking relationship to maintain their deposit insurance coverage to the extent applicable.” First Republic Bank’s customers should continue to use their existing branch till further notice. As of 13 April 2023, First Republic Bank had total assets of approximately US$229.1 billion and total deposits of US$103.9 billion.
JPMorgan Chase’s Purchase of First Republic Bank’s Assets
In addition to taking over all deposits, JPMorgan Chase Bank has agreed to “substantially” purchase all of First Republic Bank’s assets. According to sources, more than half a dozen US banks were bidding for the acquisition of First Republic Bank, in which JP Morgan Chase & Co. has got the majority stake in the bank.
Struggling Financially
Lending to technology startups, First Republic Bank, a Silicon Valley-based bank, has been struggling financially for a long time. Prior to this, Silicon Valley Bank has also sunk, and that too used to finance technology startups. Although the exact reasons for the downfall of First Republic Bank are not clear, experts believe that the bank’s over-exposure to the tech industry might have played a significant role.
In conclusion, the news of First Republic Bank’s sinking has come as a shock to many investors, and the acquisition by JPMorgan Chase & Co. has raised several questions about the future of the banking industry in America. It remains to be seen how the FDIC and other regulatory authorities will handle the fallout from this latest development, but one thing is clear – the banking industry is facing significant challenges that will require creative solutions and careful planning to navigate.
