PHOTO
JPMorgan Chase on Monday said it has acquired a substantial majority of assets--approximately $173 billion of loans and approximately $30 billion of securities--and assumed the deposits and certain other liabilities of First Republic Bank from the Federal Deposit Insurance Corporation (FDIC).
The US bank said in a statement that it is assuming all deposits --both insured and uninsured--worth about $92 billion.
In a statement, the California Department of Financial Protection and Innovation said that JPMorgan Chase will assume all deposits and “substantially all assets” of the bank. The California Department of Financial Protection and Innovation had taken possession of First Republic and appointed the FDIC as receiver of the bank.
"Our government invited us and others to step up, and we did," said Jamie Dimon, Chairman and CEO of JPMorgan Chase. "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."
Dimon added, "This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise."
A deal for First Republic comes less than two months after Silicon Valley Bank and Signature Bank failed amid a deposit flight from US lenders, forcing the Federal Reserve to step in with emergency measures to stabilize markets.
While SVB was a lender to startups, San Francisco-based First Republic Bank focused on catering to the affluent. In the wake of the SVB fiasco, First Republic clients withdrew more than $100 billion in deposits, much of it in just three weeks in March.
PNC Financial Services Group and Citizens Financial Group Inc were the other lenders who put forth their final bids, Reuters had reported on Sunday citing unnamed sources.
JPMorgan Chase added expects recognize an upfront, one-time, post-tax gain of approximately $2.6 billion, which does not reflect the approximately $2.0 billion dollars of post-tax restructuring costs anticipated over the next 18 months, it said.
Shares of First Republic are down 97% so far this year as of Friday’s close, CNBC reported.
(Writing by Brinda Darasha; editing by Seban Scaria)
