Regulators reportedly took control of First Republic Bank and sold it to JPMorgan Chase on Monday in a move that will see 84 of its locations across 8 states reopen as JPMorgan branches. The struggling bank was commandeered by the Federal Deposit Insurance Corporation (FDIC) before being sold, according to the New York Times.
The bank, based in San Francisco, had struggled after the collapse of Silicon Valley Bank and the Signature Bank went under. First Republic Bank was generally considered to be the next bank that would go under after the financial crisis.
A press release from the California Department of Financial Protection and Innovation (DFPI) read: "The DFPI appointed the Federal Deposit Insurance Corporation (FDIC) as receiver of First Republic Bank. The FDIC has accepted a bid from JPMorgan Chase Bank, National Association, Columbus, Ohio, to assume all deposits, including all uninsured deposits, and substantially all assets of First Republic Bank.”
The deal between the FDIC and JPMorgan was reportedly announced just hours before the US markets opened on Monday, per Fox News. In addition to First Republic being sold, it was announced by a regulator that an insurance fund would have to spill out $13 billion to cover the losses suffered by First Republic.
Jamie Dimon, JPMorgan’s chief executive, said: “Our government invited us and others to step up, and we did.”
However, JPMorgan’s large acquisition makes the nation’s largest bank even larger, giving it even more power and sway. The Times reported that this move would likely draw political scrutiny, especially from progressive Democrats in Washington. The report also noted that the fall of First Republic would make it the second largest bank in US history to collapse after Washington Mutual, which failed during the 2008 crisis.
The federal government’s takeover of First Republic comes almost two months after it took over Signature Bank and Silicon Valley Bank. Consequently, regional banks have feared that the same could happen to them, which has not yet happened.
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