JP Morgan Chase will acquire First Republic Bank and assume all deposits, uninsured deposits, and all assets of the bank.
A last-ditch effort to persuade lenders to keep First Republic afloat had failed, prompting the Californian financial regulator to take possession of First Republic.
The California Department of Financial Protection and Innovation appointed the Federal Deposit Insurance Corporation(FDIC) receiver of the bank.
The FDIC accepted JPMorgan’s bid for the bank’s assets.
Since the sudden collapse of Silicon Valley Bank in March, attention has focused on First Republic as the weakest link in the U.S. banking system. Like SVB, which catered to the tech startup community, First Republic was also a California-based specialty lender of sorts. It focused on serving rich coastal Americans, enticing them with low-rate mortgages in exchange for leaving cash at the bank.
The First Republic debacle began as its clients withdrew more than $100 billion in deposits, the bank revealed in its earnings report on April 24.
First Republic was forced to borrow heavily from Federal Reserve facilities to maintain operations, which pressured the company’s margins because its cost of funding is far higher now.