The Federal Deposit Insurance Corp (FDIC) announced on Monday that First Republic Bank, based in San Francisco, has been seized, and a deal was made to sell all deposits and most assets to JPMorgan Chase.
This marks the third midsize bank to fail in the US within two months.
Regulators acted quickly to avoid further banking instability in the US, and all of the bank's 84 branches across eight states will reopen as branches of JPMorgan Chase.
First Republic Bank had struggled after the failure of Silicon Valley Bank and Signature Bank, in which it had exposure to low-interest-rate loans and a high amount of uninsured deposits.
Its primary clients were wealthy individuals who rarely defaulted on their loans. Before the bank failed, it had a strong banking franchise, with the majority of its profits coming from making low-cost loans to the wealthy, which reportedly included Meta Platforms CEO, Mark Zuckerberg.
However, most of its deposits were uninsured, causing investors and analysts to worry about the potential loss of money for depositors in case the bank failed.
In its recent quarterly results, the bank revealed that depositors withdrew over $100 billion during April's crisis, causing concern for the bank's future.
Additionally, the bank announced its plans to lay off up to a quarter of its workforce, totalling around 7,200 employees in late 2022.
Quadri Adejumo covers World News, Health, Climate & Humanitarian.
0 Comment(s)
SPONSORED
HEADLINE
TRENDING