JP Morgan is set to acquire most of the collapsing California bank First Republic, in a takeover brokered by regulators as the US races to contain a rash of bank failures. The Federal Deposit Insurance Corporation (FDIC) confirmed that First Republic had collapsed and would be taken over by JP Morgan. This is the third US lender to collapse this year, after Silicon Valley Bank and Signature Bank, a sequence that has prompted concerns about contagion last seen in the 2008 global banking crash.
The Fed has launched emergency measures to stabilize the markets, but First Republic’s shares fell by more than 75% last week after it revealed that customers had withdrawn $100bn of deposits in March. US central bank officials have blamed reforms during the presidency of Donald Trump, which had the effect of watering down oversight on mid-sized banks such as SVB and First Republic.
JP Morgan's acquisition comes shortly after 11 American banks pumped $30 billion into First Republic in March in an attempt to stabilize their business following collapses from Silicon Valley Bank and Signature Bank. However, despite these efforts, customers withdrew significant amounts driving share prices downward.
In response to this news announcement today about JP Morgan acquiring most assets and taking on all deposits for first republic bank U.S stocks seem optimistic with Dow Jones Industrial Average futures up 20 points at market open Monday morning.
"We are committed to providing our new clients with exceptional service while maintaining stability within our organization," said Jamie Dimon, CEO of JP Morgan Chase & Co., "Our goal is not only smooth integration but also ensuring long-term success."
Attention now shifts towards potential fallout from this closure affecting overall confidence within wider U.S banking system especially given recent events surrounding other financial institutions like Silicon Valley Bank Signature who have experienced similar issues lately due part lack regulation monitoring mid-size entities throughout nation