Biggest Bank Grows: JPMorgan Buys First Republic

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"FDIC HQ" by afagen is licensed under CC BY-NC-SA 2.0.

Federal bank regulators seized the failing First Republic Bank (FRB) last week, and JPMorgan, the largest U.S. bank, and third largest in the world, bought the company on Sunday.

Unlike the failures of Silicon Valley Bank and Signature Bank, uninsured deposits at FRB will be assumed by the purchaser.

The Wall Street Journal reports:

JPMorgan said it will assume all of First Republic’s $92 billion in deposits—insured and uninsured. It is also buying most of the bank’s assets, including about $173 billion in loans and $30 billion in securities.

As part of the agreement, the Federal Deposit Insurance Corp. will share losses with JPMorgan on First Republic’s loans. The agency estimated that its insurance fund would take a hit of $13 billion in the deal. JPMorgan also said it would receive $50 billion in financing from the FDIC.

JPMorgan will repay $30 billion in deposits made by other “too big to fail” banks in an effort to rescue FRB, after depositors withdrew $100 billion in March. But after the dust settles, JPMorgan will emerge bigger than ever.

How big is the Megabank? As the WSJ reports, “JPMorgan had $2.4 trillion in deposits at the end of the first quarter.”

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