US regulators announced today that First Republic Bank (FRC.N) has been seized, making it the third largest US institution to fail in two months.
JP Morgan to Buy First Republic Assets and Take on Deposits
JPMorgan said in a statement that the banking giant will acquire First Republic Bank’s $173 billion in loans and approximately $30 billion in securities, including $92 billion in deposits.
JPMorgan does not assume the bank’s corporate debt or preferred stock.
First Republic Bank shares tumbled 36% in premarket trading. The stock has lost 97% of its value this year. JP Morgan shares rose 2.6%, while S&P 500 futures were flat.
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The company was one of several interested buyers, including PNC Financial Services Group (PNC.N) and Citizens Financial Group Inc (CFG.N), which submitted final bids Sunday in an auction run by US regulators, sources familiar with the matter said over the weekend. .
The California Department of Financial Protection and Innovation announced earlier today that it has taken over the First Republic and that the Federal Deposit Insurance Corporation (FDIC) will act as the buyer.
The FDIC estimated the cost to the Deposit Insurance Fund to be approximately $13 billion. The final cost will be determined when the FDIC terminates trusteeship.
The bailout came less than two months after Silicon Valley Bank and Signature Bank failed amid deposit runs from US lenders.
It forced the Federal Reserve to step in with emergency measures to stabilize markets.
These failures followed the voluntary liquidation of crypto-focused Silvergate.
*Not investment advice.