First Republic Bank News – On Monday, United States regulators stated that a deal is finalized to sell the First Republic Bank to JP Morgan Chase & Co.
Bank will hold $173 billion of loans and about $92 billion in deposits. In addition, $30 billion of security to hand over, a buyer said in his statement.
However, it is claimed that the bank shares have collapsed in premarketing trading by about 36%, which contributes to 97% of the loss in its value this year. With JP Morgan shares, it helped the value move up 2.6%.
The U.S. regulators issued an auction where multiple buyers such as Financial Services Group, Citizens Financial Group, JP Morgan, etc showed their interest and submitted final bids on Sunday. Sources were invited by the government and were briefed on the matter over the weekend.
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“Our government invited us and others to step up, and we did. 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” Jamie Dimon, Chairman and CEO of JPMorgan Chase.
First Republic Bank News reached that it previously had a total value of $230 billion. Currently, the market is much lower than that. Also, the cost of all loans is now lower because of rising interest rates. This is much interesting and probably why JP Morgan won the auction.
Furthermore, all the other provisional banking legal authorities who were also involved in bidding, didn’t want all the assets. On the other hand, JP Morgan taking on everything does lessen the potential loss for the FDIC. Hence, it allowed him to win the bid.
“First Republic is the 2nd largest bank failure in the history of the U.S. and 3rd major bank to fail since March. Things started to spiral last week after the first quarter earnings call by the first republic, where they revealed that deposits fell by 40% totaling about $100 billion. That sent stock pricing falling just on Friday. Shares were trading at about $3 down from about $22 earlier in March” reported CNN.
The Treasury Department also reacted to First Republic Bank News and said, “Treasury is encouraged that this institution was resolved with the least cost to the deposit insurance fund, and in a manner that protected all depositors. The banking system remains sound and resilient, and Americans should feel confident in the safety of their deposits and the ability of the banking system to fulfill its essential function of providing credit to businesses and families.”
So, all the legal authorities including FDIC, JP Morgan Chase, and the Treasury Department assured customers, who deposited in the bank, that the bank here in the U.S. is safe. Despite this, it is astonishing to see three big banks in the U.S. failures since March.
As per JP Morgan’s statement, 84 offices of the failed bank in eight states will reopen as branches of JP Morgan Chase from Monday.
So, the FDIC report on the signature bank has shown the root cause of the banking system that led down the value to failure as follows:
- Poor Bank Management
- Management did not fully understand the risk of crypto deposits
- Staffing shortages
These are some of the major points that have been displayed.
Roger Altman, former deputy of the treasury, and founder and chairman of Evercore said, “Deposits kept leaving the first republic. What basically happened here is that after the failure of Silicon Valley Bank a few weeks ago, a lot of depositors just simply decided that they didn’t want their money at medium-sized banks, and they moved that money either to the very largest banks like JP Morgan or Bank of America or to money market funds. The First Republic in recent weeks lost almost all of its deposits.”
Nevertheless, First Republic Bank News went viral on social media and became a top trend in the USA.
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