Latest Banking Failure Results in US Regulators Seizing California’s First Republic
The latest banking failure has resulted in the US financial authorities taking possession of the troubled First Republic Bank in California, which will be acquired by JPMorgan Chase, as announced by government regulators on Monday.
The Federal Deposit Insurance Corporation (FDIC) stated, “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 California Department of Financial Protection and Innovation stated that JPMorgan will assume “all deposits, including those uninsured, and a majority of the assets.
” First Republic’s shares plummeted after it disclosed last week that it had lost more than $100 billion in deposits in the first quarter and failed to come up with a workable rescue plan.
The federal government stepped in with the FDIC and the US Treasury approaching six banks last week to gauge their interest in buying First Republic assets, a source told AFP on condition of anonymity.
With its assets standing at $233 billion at the end of March, First Republic is set to become the second largest bank to fall in US history (excluding investment banks, like Lehman Brothers) after Washington Mutual’s bankruptcy in 2008 (AFP).
