First Bank was taken over by the California Department of Financial Protection and Innovation, which later completed the sale of the bank to JP Morgan Chase and Co.
On Monday, JPMorgan Chase & Co. announced that it has acquired a significant majority of assets and liabilities of First Republic Bank. According to Reuters, JPMorgan will take on all deposits, including uninsured deposits, and almost all assets of First Republic Bank, as confirmed by the California Department of Financial Protection and Innovation.
The acquisition of First Republic Bank by JPMorgan means that all of First Republic Bank’s 84 branches in eight states will operate as branches of JPMorgan Chase Bank from Monday. First Republic Bank is known for its private banking services for high net worth individuals, similar to the now-defunct Silicon Valley Bank that focused on venture capital firms.
With this acquisition, JPMorgan has strengthened its position in the private banking sector, and it will be interesting to see how it leverages this new asset to expand its market share in the future.
San Francisco-based First Republic Bank has faced significant challenges since the collapse of Silicon Valley Bank and Signature Bank in early March. This caused concern among investors and depositors about the bank’s ability to remain independent, leading to a struggle for survival. Unfortunately, First Republic became the third major US bank to collapse in recent months.
First Republic has been involved in multiple acquisitions and divestitures over the years, with Merrill Lynch & Co. purchasing the bank for $1.8 billion in 2007. After Bank of America acquired Merrill Lynch in 2009, ownership of First Republic transferred to them, and then to investment firms General Atlantic and Colony Capital in mid-2010. These firms purchased First Republic for $1.86 billion and then took it public.
Eleven US banks attempted to keep First Republic afloat by providing $30 billion in fresh deposits on March 16, with JPMorgan, Bank of America Corp., Citigroup Inc., and Wells Fargo & Co. each contributing $5 billion. Other banks, such as Goldman Sachs Group Inc. and Morgan Stanley, also offered smaller amounts as part of a plan developed in collaboration with US regulators. Despite these efforts, the bank was unable to avoid collapsing.