Saudi Press

Saudi Arabia and the world
Friday, Oct 18, 2024

JPMorgan to take over deposits of troubled First Republic Bank

JPMorgan to take over deposits of troubled First Republic Bank

After Silicon Valley Bank and Signature Bank, First Republic is the third midsize bank in the US to fail in just two months.
US regulators have seized troubled First Republic Bank and sold all of its deposits and most of its assets to JPMorgan Chase Bank in a bid to head off further banking turmoil in the country.

San Francisco-based First Republic is the third midsize US bank to fail in two months. It has struggled since the collapse of Silicon Valley Bank and Signature Bank and investors and depositors had grown increasingly worried it might not survive because of its high amount of uninsured deposits and exposure to low-interest rate loans.

The Federal Deposit Insurance Corporation said early on Monday that First Republic Bank’s 84 branches in eight states will reopen as branches of JPMorgan Chase Bank and depositors will have full access to all of their deposits.

Regulators worked through the weekend to find a way forward before US stock markets opened. Markets in many parts of the world were closed for May 1 holidays. The two markets in Asia that were open, in Tokyo and Sydney, rose.

“Our government invited us and others to step up, and we did,” said Jamie Dimon, chairman and CEO of JPMorgan Chase.

As of April 13, First Republic had approximately $229 billion (€208 billion) in total assets and $104 billion (€95 billion) in total deposits, the FDIC said.

At the end of last year, the Federal Reserve ranked it 14th in size among US commercial banks.

Before Silicon Valley Bank failed, First Republic had a banking franchise that was the envy of most of the industry. Its clients - mostly the rich and powerful - rarely defaulted on their loans.

The bank has made much of its money-making low-cost loans to the wealthy, which reportedly included Meta Platforms CEO Mark Zuckerberg.

Flush with deposits from the well-heeled, First Republic saw total assets more than double from $102 billion (€93 billion) at the end of 2019’s first quarter, when its full-time workforce was 4,600.

But the vast majority of its deposits, like those in Silicon Valley and Signature Bank, were uninsured — that is, above the $250,000 (€227,400) limit set by the FDIC. And that worried analysts and investors. If First Republic were to fail, its depositors might not get all their money back.

Those fears were crystallised in the bank’s recent quarterly results. The bank said depositors pulled more than $100 billion (€90 billion) out of the bank during April’s crisis. San Francisco-based First Republic said that it was only able to stanch the bleeding after a group of large banks stepped in to save it with $30 billion (€27 billion) in uninsured deposits.

Since the crisis, First Republic has been looking for a way to quickly turn itself around. The bank planned to sell off unprofitable assets, including the low-interest mortgages that it provided to wealthy clients. It also announced plans to lay off up to a quarter of its workforce, which totalled about 7,200 employees in late 2022.

Investors remained sceptical. The bank’s executives have taken no questions from investors or analysts since the bank reported its results, causing First Republic's stock to sink further.

And it’s hard to profitably restructure a balance sheet when a firm has to sell off assets quickly and has fewer bankers to find opportunities for the bank to invest in.

It took years for banks like Citigroup and Bank of America to return to profitability after the global financial crisis 15 years ago, and those banks had the benefit of a government-aided backstop to keep them going.
Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Global Tensions Surge: Hate Crime in Maryland, Rising Middle Eastern Conflicts, and US Political Drama Unfold
Hezbollah Deputy Chief Calls for Ceasefire Amidst Escalating Conflict with Israel
US Warns Israel of Potential Aid Cuts Over Gaza Assistance Delays
Global Solar Initiatives Surge in Saudi Arabia Amidst Rising Middle East Tensions
Israeli Airstrike in Lebanon Sparks UN Investigation Calls Amid Rising Regional Tensions and Global Responses
Saudi Arabia Champions Cultural and Diplomatic Initiatives for Middle East Stability and Palestinian Support
Turkiye Protests Intensify Amid Rising Femicides as Global Tensions Escalate and EU-GCC Summit Approaches
Saudi Arabia’s Shoura Council Pushes for Educational Investment, as Global Relations and Cultural Contributions Shine
Lebanon's Healthcare Crisis Amid Conflict, Saudi Arabia's Green Campaign, and Sports Highlights: A Snapshot of Regional Developments
Global Developments: Pakistan's Lockdown for SCO Summit, EU Migration Challenges, US Voting Rights Legal Battles, and Boost in Saudi Markets
Sustainable Innovation: Riyadh's New Murabba Hits Milestone Amid Regional Security and Climate Initiatives
Remarkable Survival Tale and Global Economic Collaborations: From Russia to Saudi Arabia's Expanding Influence
From Saudi Art at G20 to Lebanon's Rising Tensions: Navigating Global Cultural and Political Currents
Kamala Harris Courts Black and Latino Voters; UN Condemns Israeli Attacks; Saudi Arabia Launches International Qur’an Competition; Study of Al-Wahbah Crater Unveils Potential Extraterrestrial Insights; Pioneering Robotic Organ Transplants in Riyadh; Saudi Crown Prince’s Diplomatic Visit to Egypt
Egypt Reduces External Debt by $15 Billion as Islamic Development Bank Commits $3 Billion to Global Projects; Middle East Tensions Highlighted by Recent Developments
Global Developments: Italian Troops' Safety, Afghan Relocations, and Political Shifts in Indonesia
Global Economic Turbulence: IMF Debt Warning, Oil Price Slump, and Sustainability Initiatives
Escalating Tensions in Gaza and Beyond: Regional Leaders Respond Amidst Global Unrest
Rising Tensions: Israel Strikes Lebanon, Iran Denies Missile Transfers, and China Conducts Drills Near Taiwan
Arab American PAC Breaks Tradition, Global Tensions Rise, and New Alliances Form
Russia's Call for a BRICS Financial System Alternative
Israel Vows to Limit Retaliatory Strike on Iran to Military Facilities
Escalating Conflicts: UN Peacekeepers Injured, Ukraine Villages Captured, and Trial for Daesh Crimes Marks Global Tensions
Global Tensions Rise as China Calls for Ceasefire, amidst Polio Outbreak and Innovative Hezbollah Tactics Challenge Israeli Defenses
Erdogan Criticizes UN's Inaction; Global Tensions Rise Over Human Rights and Resource Disputes
Global Tensions Surge: US-UK Airstrikes in Yemen, Diplomatic Shifts in Iran, and Israeli-Lebanese Struggles
Saudi Arabia's Ambitious Moves: Hydrogen Trains, Riyadh Metro, and Smart City Collaborations
Global Tensions and Tragedies: UN Experts Criticize Tunisia's Migrant Policies, Israeli Airstrikes Hit Lebanon, UK Court Hears Family Murder Trial, and New Saudi-Philippines Energy Pact
Saudi Arabia Embraces Sustainable Progress with Energy Pact and Cultural Milestones: From Renewable Innovations to Fashion and Sporting Triumphs
Netanyahu Urges UN to Relocate Lebanon Peacekeepers Amid Escalating Tensions
Tech Boosts Singapore’s Economy to 4.1% Growth in Q3
EU Sanctions Iranian Entities, UNHCR Warns of Global Displacement, and Saudi Arabia Advances Green and Industrial Ventures
Riyadh Season 2024: A Blend of Cultural Marvels and Cybersecurity Initiatives Amidst Middle Eastern Turmoil and Archaeological Revelations
From Desert Adventures to Diplomatic Tensions: Exploring Philby's Legacy and Global Affairs
Qatar's Tourism Boom and Saudi Arabia's Strategic Advances: Highlights from Economic Growth to Humanitarian Efforts
Global Developments: Philippines-Saudi Green Alliance, Pakistan's Security Ops, France's Immigration Shift, Ukraine-Russia Tensions, EU on Israeli Actions, and Dussmann's Strategic Move
Rising Tensions and Humanitarian Crises: Israeli Airstrikes in Gaza and Regional Conflicts Escalate
Global Tensions and Local Challenges: Missile Strikes Shift Defense Focus, Political Security Concerns Rise, and Societal Transformations Unfold
World Bank Warns of Rising Debt; Saudi Arabia Unearths Cave Wonders; Middle East Tensions and U.S. Military Moves; China Conducts Drills Near Taiwan
Sweden Urges EU to Designate Iran's Guards as Terrorists Amid Alleged Recruitment of Swedish Gang Members
Regional Diplomacy Intensifies Amid Rising Tensions Between Hezbollah and Israel
Saudi Arabia's Vision 2030: Pioneering Food Security, Digital Transformation, and Global Partnerships Amidst Regional Tensions
Amid Conflict in Lebanon, Saudi Arabia Charts Path to Global Logistics Leadership and Cultural Enrichment
Madinah Dates Festival Celebrates Heritage Amid Rising Middle East Tensions: A Complex Global Landscape
Saudi Arabia Unveils Ambitious Logistics and Technological Plans Amidst Vision 2030 Reforms
Tensions Escalate in Middle East Following Israeli Airstrike; Saudi Arabia Drives Environmental and Economic Initiatives
Saudi Arabia's Environmental Achievements Shine on IUCN Green List Amid Regional Conflicts and Cultural Celebrations
Global Developments: Saudi Arabia Condemns Land Seizure, Australia Criticizes Calls Against Ceasefire, and Cultural Initiatives in Full Swing
Iran Condemns New U.S. Sanctions Amid Rising Tensions in Middle East and Asia
Regional Tensions Flare as Israel Targets Iranian Sites Amid Saudi Condemnation and Humanitarian Efforts
×