First Republic seized by California regulator, JPMorgan to assume all deposits
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The Californian financial regulator has taken possession of First Republic, resulting in the third failure of an American bank since March, after a last-ditch effort to persuade rival lenders to keep the ailing bank afloat failed.
The California Department of Financial Protection and Innovation (DFPI) said in a release early Monday that JPMorgan Chase will assume all deposits, including uninsured deposits, and «substantially all assets» of the bank.
The Federal Deposit Insurance Corporation was appointed receiver of the bank.
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.
But that model unraveled in the wake of the SVB collapse, as First Republic clients withdrew more than $100 billion in deposits, the bank revealed in its earnings report April 24. Institutions with a high proportion of uninsured deposits like SVB and First Republic found themselves vulnerable because clients feared losing savings in a bank run.
Shares of First Republic are down 97% so far this year as of Friday's close.
This story is developing. Please check back for updates.
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