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Regulators seized troubled First Republic Bank early Monday, making it the second-largest bank failure in United States history, and promptly sold all of its deposits and most of its assets to JPMorgan Chase in a bid to end the turmoil that has raised questions about the health of the US banking system.
It is the third midsize bank to fail in less than two months. The only larger bank failure in US history was Washington Mutual, which collapsed at the height of the 2008 financial crisis and was also taken over by JPMorgan in a similar government-orchestrated deal.
“Our government invited us and others to step up, and we did,” said Jamie Dimon, chairman and CEO of JPMorgan Chase.
First Republic’s 84 branches opened on Monday as branches of JPMorgan Chase, which acquired the bank’s US$92 billion in deposits and US$203 billion in loans and other securities. The bank’s shareholders are likely to be wiped out as part of the deal.
Dimon said in a conference call with both reporters and investors that he believed “this part of this (banking) crisis is over”. Other midsize banks reported their results last week, and the vast majority of them showed that deposits had stabilised and profits remained relatively healthy. The outlier was First Republic.