JPMorgan buys the assets of the First Republic bank after its intervention and closure

MADRID, 1 May. (EUROPA PRESS) -

The regulatory services of the United States have announced this Monday that JPMorgan has bought the assets of the First Republic bank after its intervention and closure "to protect depositors", after becoming the third entity to fail in just two months in the North American country.

"First Republic Bank, of San Francisco, California, has been closed today by the California Department of Financial Protection and Innovation, which has appointed the Federal Deposit Insurance Corporation (FDIC) as receiver," according to a statement published by the FDIC itself, which adds that "to protect depositors" it has proceeded to sell assets to JPMorgan Chase.

Thus, he has stressed that JPMorgan "will assume all the deposits" and "practically all of the assets of First Republic Bank", after presenting an offer to take over all the deposits of First Republic. "As part of the transaction, First Republic's 84 offices in eight states will reopen as branches of JPMorgan Chase, beginning today and during business hours," he specified.

The FDIC has noted that "all First Republic depositors will become JPMorgan Chase depositors and will have full access to all of their deposits," while stressing that "deposits will remain FDIC-insured and customers have no have to change their banking relationship to retain deposit insurance coverage up to applicable limits."

"First Republic clients should continue to use their current branch until they receive notification from JPMorgan that it has completed changes to the systems to allow other JPMorgan branches to also process their accounts," the agency stressed in its statement, published through its website.

On the other hand, it has revealed that, as of April 13, First Republic had some 229,100 million dollars (about 208,325 million euros) in total assets and 103,900 million dollars (about 94,481 million euros) in deposits. "In addition to assuming all of the deposits, JPMorgan agrees to purchase virtually all of First Republic's assets," he said.

The FDIC has also explained that both the agency and JPMorgan "enter into a transaction of shared losses on single-family, residential and commercial loans that it acquired from the former First Republic." "The FDIC, as servicer, and JPMorgan will share losses and potential recoveries on loans covered by the loss-sharing agreement," it said.

In this way, it has argued that "the transaction of shared losses is expected to maximize the recovery of the assets by keeping them in the private sector", while adding that "the transaction is also expected to minimize the alterations for the clients of loans".

Finally, it has indicated that the decision "has involved a highly competitive bidding process" and "has resulted in a transaction consistent with the minimum cost requirements of the Federal Deposit Insurance Act. "The FDIC estimates that the cost to the Fund Deposit Insurance will be around 13,000 million dollars (around 11,821 million euros). This is an estimate and the final cost will be determined when the FDIC ends the judicial administration, "he has settled.

First Republic Bank, based in San Francisco, was one of the entities targeted during the crisis caused by the collapse of Silicon Valley Bank (SVB) and Signature Bank. First Republic's shares went from trading at $122.50 on March 1 to just $3 last Friday and the intervention of the FIDC was already taken for granted.

Shortly after the collapse of SVB and Signature in March, major US banks agreed to a $30 billion loan to First Republic at the request of Treasury Secretary Janet Yellen. The entity began operations in 1985 with a single office in San Francisco and is known for hosting wealthy clients from the coastal states. It currently has 82 branches, according to its website, most of them in wealthy neighborhoods.