JPMorgan Chase, the American banking giant, has come to the rescue of the troubled First Republic Bank (FRB) by acquiring its assets after early rescue efforts failed. The California Department of Financial Protection and Innovation closed FRB on May 1, transferring control of the institution to the Federal Deposit Insurance Corporation (FDIC), which promptly struck a purchase and assumption agreement with JPMorgan.
With $229.1 billion in assets and $103.9 billion in deposits, FRB’s 84 locations across eight states will now reopen as JPMorgan Chase branches. FRB depositors will automatically become part of JPMorgan, with full access to their insured deposits through the FDIC. Customers can continue using their existing branches for banking services until they receive further instructions from JPMorgan.
In addition to the asset transfer, JPMorgan and the FDIC have entered into a loss-sharing agreement for residential and commercial loans acquired by FRB. Losses and recoveries on loans covered by the agreement will be split between the FDIC, acting as receiver, and JPMorgan. This acquisition follows the dramatic plunge of FRB’s shares after news of a potential government receivership broke, causing a 20% drop in just hours. FRB is the latest U.S. bank to collapse in 2023, joining Silicon Valley Bank and Signature Bank.