JP Morgan Chase to acquire most assets of First Republic Bank in USA

JP Morgan Chase has agreed with USA to acquire most of the assets of First Republic Bank (FRB). The operation has been negotiated ‘in extremis’ during this weekend.

“To protect depositors, the FDIC will enter into a takeover agreement with JPMorgan Chase Bank, National Association, Columbus, Ohio, to assume all deposits and substantially all of First Republic Bank’s assets.” , has detailed in a statement the Federal Deposit Insurance Corporation.

In this regard, the independent US federal agency has recognized that “the bank failures are inevitable in a dynamic and innovative financial system”, although “they should plan for those bankruptcies focusing on strong capital requirements and an effective resolution framework for end the culture of bailing out the countrys that privatizes profits while socializing losses.”

Thus, JPMorgan will assume “all depositsincluding the uninsured, and most assets,” as explained by the California Department of Financial Protection and Innovation (DFPI).

“The government has asked us to step up and we have done so. Our financial strength, capabilities and business model have allowed us to make an offer to execute the transaction in a way that minimizes costs to the deposit insurance fund “, said Jamie Dimon, CEO of JPMorgan.

Specifically, the transaction was carried out with the acquisition of 173,000 million in loans and 30,000 million in securities.

Third US bank to fail

A few days ago the Californian financial institution lost 97% of its value on the stock market in recent weeks, which meant losses worth of more than 100,000 million dollars in deposits. This collapse triggered the alerts of a new contagion in the US financial sector and, by extension, to the rest of the world.

A group of banks in the country tried to save the entity a few weeks ago with 30,000 million. The objective of this rescue was to prevent this bank from continuing the path taken by Silicon Valley Bank and Signature Bank, entities closed by the authorities for fear of “systemic risk”.