Global Courant 2023-05-01 17:45:05
Another bank in the US is on the verge of collapse and again, one of the most important banking institutions intervenes for rescue, in a scenario similar to that of Credit Suisse in Switzerland.
After a deal brokered by regulators, JP Morgan has decided to take over troubled US bank First Republic. First Republic is the third US bank to teeter on the brink of bankruptcy in recent months, raising fears of a wider sector crisis.
Shares of the San Francisco-based lender fell more than 75% last week after its executives publicly admitted that their customers had withdrawn $1 billion in deposits in March.
First Republic’s troubles follow the collapse of Silicon Valley Bank (SVB) in March and the collapse of another US lender, Signature Bank. In an effort to come up with a rescue package for First Republic, US officials had contacted 6 banks.
Jamie Dimon, chief executive of JP Morgan Chase, confessed that the government had “invited” the banking giant, along with others, to “expand”, and we, he said, did.
JP Morgan from First Republic will acquire $173 billion in loans, about $30 billion in securities and $92 billion in deposits. As part of the agreement, the Federal Deposit Insurance Corporation in the United States of America, FDIC will share with JP Morgan the losses from the loans. Its insurance fund was estimated to take a hit of about $13 billion from the deal.
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