USA: Bank First Republic was taken over by regulators and sold to JPMorgan

First Republic Bank was acquired by the FDIC on Monday and then sold to JPMorgan Chase. It is the second largest bank failure in U.S. history. The institution has struggled since its collapse in March this year. Silicon Valley Bank.

The bank was sold to giant JPMorgan Chase through a “highly competitive bidding competition,” according to the Federal Deposit Insurance Corporation (FDIC), which has taken control of First Republic amid its deteriorating situation.

As part of the deal, JPMorgan will take on all of the bank’s $92 billion worth of deposits and purchase nearly $230 billion of its assets. However, it will not take over corporate debts. The operation cost the FDIC $13 billion, and the costs will be funded by a guarantee fund made up of all banks insured by the FDIC.

“Our government invited us and others to take action, and we did,” JPMorgan chief executive Jamie Dimon said.

Based in San Francisco, First Republic was the second largest bank in US history to be taken over by the state. Its collapse came less than two months after Silicon Valley Bank and Signature Bank suffered a similar fate. Despite attempts by the government to calm the situation, the institution has struggled ever since and has steadily lost capital, while its shares have fallen 97 percent in that time.

According to the Washington Post, the causes of the collapse were similar to those of SVB. Both banks invested heavily in long-term assets, such as treasury bonds that fell in value as the Federal Reserve raised interest rates.

The newspaper adds that additional unrest in the banking sector will further complicate the task facing the Fed. The central bank has been consistently raising interest rates for over a year to fight inflation and has not yet fully brought it under control; additional increases may contribute to further problems for the banks.

From Washington Oskar Górzyński (PAP)

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