The American authorities took control of the First Republic bank on Monday and sold the vast majority of it to JPMorgan Chase, hoping to close the episode of banking crisis that emerged in March.
The establishment was under strong pressure since the close failures of two establishments with a similar profile in early March, Silicon Valley Bank and Signature.
Based on the amount of assets (229 billion dollars as of April 13), it is the second largest bank failure in the history of the United States (excluding investment banks like Lehman Brothers) after that of Washington Mutual in September 2008. According to the agreement, JPMorgan will recover all of the bank's deposits as well as “
almost
” all of its assets, according to the press release from the agency in charge of guaranteeing bank deposits (FDIC).
"
Our government called on us and others to intervene, and we did
," JPMorgan CEO Jamie Dimon said in a separate statement.
"
Our financial strength, capabilities, and business model allowed us to provide an offer to execute the transaction in a manner that minimized costs to the deposit insurance fund,
" the FDIC said. added.
Read alsoHow the big American banks took advantage of the crisis
Operation at 13 billion
The operation implies that First Republic's loans must be re-evaluated downwards, and the FDIC has agreed to assume part of these losses: the agency estimates that the operation will cost it approximately 13 billion dollars.
The bank's branches will be able to reopen on Monday as usual.
The establishment had been in turmoil since the bankruptcies of SVB and Signature, seized by regulators after mass withdrawals from customers worried about their viability.
The authorities and other major banks then came to the rescue of First Republic to prevent it from experiencing the same fate, with eleven financial institutions agreeing to pay out a total of $30 billion.
But that was not enough to reassure investors and the stock continued to fall on Wall Street.
The bank failed to come up with a satisfactory rescue plan and when it confirmed last Monday that many customers withdrew deposits in the first quarter, more than $100 billion in total, its already struggling stock nose dive.
First Republic was only worth $ 654 million on the stock market on Friday at the close, while it was worth more than 20 billion at the start of the year and more than 40 billion at its peak in November 2021. The authorities, who seemed reluctant to come to the rescue of a new bank, finally stepped up to the plate.
The FDIC and the Department of the Economy approached several banks in the middle of last week to gauge their interest and, on Friday, allowed a handful of them to access more financial information on First Republic.
The bidding process was "
highly competitive
" and resulted in a transaction "
conforming to least cost requirements
," the FDIC said.