JPMorgan Chase has acquired most of First Republic Bank. This acquisition comes after US banking regulators announced the closing of the crisis-hit San Francisco-based bank First Republic, and the selling off of the lender’s majority deposits of $93.5bn to JPMorgan Chase along with most of the assets. All depositors of First Republic will become depositors of JPMorgan and will have full access to their deposits.
First Republic’s failure was due to a number of reasons. The bank had a high level of uninsured deposits amounting to 68% of assets. First Republic’s loan book and investment portfolio also became less valuable as interest rates rose, which hampered a capital raise. Analysts and investors pegged paper losses at between $9.4 billion and $13.5 billion.
This acquisition marks a significant event in the banking industry and it will be interesting to see how it plays out in the future.
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