U.S. banking giant JP Morgan has been confirmed as the new owner of First republic bank after presenting a winning bid. The First Republic Bank collapsed in April, prompting the regulators to take control of it. It’s now the third major bank to fail in only two months.
JP Morgan to the rescue!
JP Morgan, one of the largest banking institutions in the U.S., has rescued the drowning First Republic Bank. JP Morgan presented a winning bid and took control of the FRB bank on MAY 1, 2023, in a deal spearheaded by the California Department of Financial Protection and Innovation (DFPI).
The DFPI appointed the Federal Deposit Insurance Corporation (FDIC) as the receiver in the deal it accepted from JPMorgan Chase bank to assume all deposits. It said that the reason behind the deal was to protect investors, as the bank did not have any feasible plan to revive its operations.
‘To protect depositors, the FDIC is entering into a purchase and assumption agreement with JPMorgan Chase Bank, National Association, Columbus, Ohio, to assume all of the deposits and substantially all of the assets of First Republic Bank,” the Federal Deposit Insurance Corporation said in a statement
The bank had a valuation of over $200B before April 13, 2023, only to disclose that it had lost over $100B in customer deposits in Q1 2023, which made its shares collapse. The bank’s $3.51 on Monday’s Pre Market, which is too low, is considered to be the $170 per share it was trading in the past year.
The FRB bank has become one of the recent major banks to fall after Credit Suisse and Silicon Valley Bank. The trend of these banks collapsing has become an issue to investors and customers who have seen the loss of deposits across all banks. Leaders like President Biden and the Governor of the Bank of England also think that banks will be tested for a while longer.
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