2023-05-01 10:24:09
The collapse of the third bank in the United States… and JPMorgan takes over
Today, Monday, JPMorgan acquired the “First Republic”, which became the third bank to falter in the United States, following its depositors fled from it and its shares collapsed. And the California financial regulator acquired the First Republic Bank today, which led to the third collapse of the American bank since March, following the failure of a last-ditch attempt to convince banks to preserve the troubled bank by injecting money into it.
According to a report in the American channel “CNBC”, the bank “JP Morgan” acquired all the deposits of the First Republic, “including uninsured deposits and the vast majority of assets. After the deal, the shares of “JP Morgan” rose by 1 percent. 2.6 percent in pre-market trading.
The California Department of Financial Protection and Innovation said it has acquired the bank and has designated the Federal Deposit Insurance Corporation as the recipient. The report said that the US Federal Insurance Corporation accepted the offer of “GB Maughan” to buy the bank’s assets.
“As part of the deal, the 84 First Republic Bank offices in eight states will reopen as branches of JPMorgan Chase Bank from today,” the corporation said in a statement. JPMorgan), and they will have full access to all of their deposits.”
In this regard, the Chairman and CEO of “JP Morgan” said that its takeover reduces the costs of the Deposit Insurance Fund. “Our government has called on us and others to bail out the bank, and we have done so,” he said in a statement. He added, “This acquisition brings a modest benefit to our company in general, as it is accretive to shareholders and helps to enhance our wealth strategy, and it is complementary to our existing franchise.”
Since the sudden collapse of Silicon Valley in March, attention has focused on the First Republic as the weakest link in the US banking system.
The First Republic is one of the banks that specializes in serving the rich, enticing them with low-priced mortgages in return for leaving the money in the bank. Last March, the bank was subjected to massive withdrawals from deposits amounting to more than one hundred billion dollars, and its shares collapsed by 97 percent until Friday’s closing.
The depletion of deposits forced First Republic to borrow heavily from Federal Reserve facilities to maintain banking operations, which put pressure on the company’s margins because the cost of funding was much higher.
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