UNITED STATES: JP Morgan purchased First Republic Bank! In a spectacular move aimed at ending a two-month banking crisis that has shaken the financial system, regulatory authorities seized command of First Republic Bank. They managed to sell it to JPMorgan Chase on Monday.
After two other lenders failed last month, dismayed bank deposits and investors, the First Republic, whose assets had been affected by the rise in interest rates, had suffered immensely.
After already being procured by the Federal Deposit Insurance Corporation, the bank was quickly sold to JPMorgan. Following a weekend competition by officials, the deal was revealed hours before establishing the US stock market.
“Our government asked us and others to step forward, and we did,” JPMorgan’s chief executive Jamie Dimon added. He stated that the deal was designed to reduce the Deposit Insurance Fund’s expenditures.
Even though the First Republic had a $30 billion lifeline from 11 of the biggest banks in the country in March, it still failed. After the deal closes, the $30 billion loan is paid back, according to JPMorgan. Following the failure of Washington Mutual during the 2008 financial crisis, First Republic will be remembered as the second-largest American bank by assets to fail.
The government’s procurement and sale of First Republic comes seven weeks after it obtained Silicon Valley Bank and Signature Bank, whose failures sent a blast wave through the sector and prompted worries that other regional banks could perhaps experience a run on deposits similar in nature to theirs.
Head of the global policy and the central bank strategy team at Evercore ISI, Krishna Guha, mentioned, “First Republic was known to be the biggest item of unfinished business from the March bank turmoil. The macroeconomic consequences of bank stress may be in their early stages.”
Utah’s Zions Bank, as well as PacWest of Los Angeles, have based their strengths better than on the First Republic, and another breakdown is not seen as drawing near.
The FDIC consulted other banking firms late last week, such as JPMorgan Chase, PNC Financial Services, and Bank of America, to solicit bids for the First Republic. Offers had to be reported by noon on Sunday.
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