JPMorgan Chase, the largest bank in the US, has acquired the majority of collapsed First Republic Bank after it was seized by the Federal Deposit and Insurance Corporation (FDIC).
In a press release, JPM says it has acquired approximately $173 billion worth of loans, $30 billion worth of securities, and $92 billion worth of deposits, both insured and uninsured.
[adinserter block="1"]Jamie Dimon, Bitcoin (BTC) critic and CEO of the bank, says,
“Our government invited us and others to step up, and we did… This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise.”
First Republic’s collapse reached its final chapter last week as its stock price plunged with such volatility that the New York Stock Exchange (NYSE) halted trading five times. The bank’s woes accelerated when it revealed that $100 billion worth of deposits vanished from its accounts as customers rushed to withdraw their capital.
Last week, the chief investment officer at J.P. Morgan Asset Management said that the crisis in the country’s banking industry is not done claiming victims.
Bob Michele said in a Bloomberg interview that it would be “naive” to think that the banking crisis was over, and warned that more pain could come, especially to regional banks if they’re unable to receive government support.
“Well, I think we have both [a banking problem and a First Republic problem]. And I think it’s somewhat naive to say that this is just limited to First Republic.
If you step back and think about it, this should never have happened. This (happened) in of the most heavily regulated, capitalized industry on the planet – banking. And the regional banking system I think is quite vital to the US.
So I think it is a crisis. I think the regional banks are heavily dependent on the FDIC (Federal Deposit Insurance Corporation). They’re heavily dependent on the Federal Home Loan Bank to get additional cash. We don’t know how they’re going to operate when those two programs expire.”
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Featured Image: Shutterstock/Digital Store/Natalia Siiatovskaia
