OVER the weekend, the Federal Deposit Insurance Corporation (FDIC) was preparing to place San Francisco-based bank First Republic under receivership imminently after shares plunged by nearly 50% on Friday.
Now, the U.S. regulator announced early morning Monday before the stock market opened that JPMorgan Chase will be acquiring most of the troubled regional lender following an overnight deal to shut it down.
This marks the third bank taken over by the FDIC in just less than 2 months.
With this, depositors will be protected but shareholders will be wiped out, marking the second-largest bank failure in the United States.
The only major bank failure that exceeds that of the first republic in U.S. history is 2008’s Washington Mutual collapse.
JPMorgan will take on 173 billion dollars in loans, 30 billion dollars of securities, and 92 billion dollars in deposits but not the first republic’s corporate debt or preferred stock.
It can also be noted that the FDIC is providing 50 billion dollars of financing as part of the deal.
Meanwhile, the first republic’s 84 branches will open as JP Morgan branches on Monday morning in the US.
