JPMorgan Chase Wins Bid to Acquire First Republic Bank Following Regulator Seizure
Following regulators taking control of First Republic Bank, a competitive bidding process initiated by the Federal Deposit Insurance Corporation (FDIC) resulted in JPMorgan Chase (JPM) as the winning buyer in a bid to “end the turmoil that has raised questions about the health of the U.S. banking system.” According to the May 1st press release by JPM, the financial institution acquired the “substantial majority” of First Republic’s assets, “including approximately $173 billion of loans and approximately $30 billion of securities,” the “assumption of approximately $92 billion of deposits,” and certain other liabilities of First Republic Bank from the FDIC. However, JPM will not be assuming First Republic’s corporate debt or preferred stock. As part of the deal, “loss share agreements covering acquired single-family residential mortgage loans and commercial loans, as well as $50 billion of five-year, fixed-rate term financing” will be provided by the FDIC. The failure by First Republic is the third midsize bank to fail in less than two months; and the second-largest bank failure in U.S. history following the 2008 collapse of Washington Mutual which was also taken over by JPM in a similar government-orchestrated deal.