JPMorgan Takes Over First Republic Bank: Details
- The assets belonging to First Republic Bank, which was shut down by the California DFPI, will be acquired by JPMorgan Chase.
- The FDIC was established as the receiver for FRB, and it has entered into a purchase and assumption agreement with JPMorgan.
- FRB currently has $229.1 billion in assets and $103.9 billion in deposits, and all its customers belong to its new owner.
- As a part of the transfer deal, 84 locations of First Republic Bank in eight states will reopen as JPMorgan Chase.
The banking system of the United States is shaking with the collapse of another bank, First Republic Bank, a provider of wealth management services headquartered in San Francisco, California. As per a recent turn of events, the assets belonging to the First Republic Bank will be acquired by JPMorgan Chase, a global leader in financial services that boasts the world’s most important entities as its clients.
This marks another historical collapse of a major banking institution, following the collapse of crypto-friendly bank Silicon Valley Bank (SVB) a few months earlier. Interestingly, the entire crypto industry is talking about how the United States banking system is broken and how cryptocurrencies offer a solution to the same.
According to a press statement from the California Department of Financial Protection and Innovation released on May 1, the Federal Deposit Insurance Corporation (FDIC) has been established as the receiver of the assets of the First Republic Bank after the DFPI closed it on the very same day. Furthermore, JPMorgan won the bidding war for the assets of FRB, which took place on April 29.
“Deposits will continue to be insured by the FDIC, and customers do not need to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of First Republic Bank should continue to use their existing branch until they receive notice from JPMorgan Chase Bank, according to the release.
In order to protect the customers of First Republic Bank, the FDIC has entered into a purchase and assumption agreement with JPMorgan. It is crucial to note that JPMorgan will be taking over all the assets of the troubled banking institution, including uninsured deposits. Additionally, FRB currently has $229.1 billion in assets and $103.9 billion in deposits.
A part of the transfer deal states that 84 locations of First Republic Bank in eight states will reopen as JPMorgan Chase, and all the depositors at FRB will now be a part of the New York-based bank. They will also have access to their total deposits insured by the FDIC, and all customers can continue to enjoy the services of the bank at their specific branches until they are notified by JPMorgan.
Moreover, a loss sharing agreement was also made between JPMorgan Chase and the FDIC for residential and commercial loans acquired by the FRB. This means that the losses and any recoveries on the loans that come under the agreement will be shared by both the bank and the FDIC due to the entity’s capacity as the receiver.
The collapse of crypto-friendly banks SVB and Signature Bank affected the entire crypto industry, as crypto exchanges are now finding it difficult to find banking partners for their customers’ deposits and withdrawals. Many members of the crypto industry believe that the regulators want to send the message that “crypto is toxic.”
As reported earlier by Bitnation, JPMorgan is hiring people with the goal of pushing institutional payments products onto clients tied to Web3, crypto, and the metaverse industries. In 2020, the bank accepted crypto exchanges Coinbase and Gemini as its first two major crypto clients, and since then, the firm has never looked back on cryptocurrencies, Web3, or the metaverse industry.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
