How much money has JP Morgan paid for First Republic Bank (FRB)?
First Republic Bank’s assets and deposits were acquired by JP Morgan Chase over the weekend in an orderly resolution avoiding the FDIC taking receivership.
JP Morgan and the FDIC announced on Monday morning that the New York banking titan would acquire the beleaguered San Francisco bank and assume its deposits in an orderly resolution. This avoided First Republic being put into receivership under the FDIC as had happened with failed Silicon Valley Bank and Signature Bank in mid-March. It also avoids authorities from having to implement any emergency measures as they did for the other two to shore up the US banking sector.
The banking giant will purchase all of First Republic’s assets and assume all of its deposits. The 84 First Republic Bank branches in eight states will open on Monday during normal business hours as JP Morgan branches. All First Republic depositors will now be JP Morgan depositors and have full access to all of their deposits.
How much money has JP Morgan paid for First Republic Bank?
JP Morgan is acquiring around $173 billion of loans and about $30 billion of securities of First Republic Bank along with roughly $92 billion of deposits. That includes the $30 billion deposited by large banks in March to stabilize the beleaguered San Francisco bank. Those deposits will be repaid post-close or eliminated in consolidation. The banking giant is not assuming the bank’s corporate debt or preferred stock.
As part of the agreement, the FDIC will provide loss share agreements to cover the single-family residential mortgage loans and commercial loans acquired under the transaction. In addition to $50 billion of five-year, fixed-rate term financing.
The banking regulator currently estimates that the cost to the Deposit Insurance Fund will be about $13 billion according to a statement. However, the final cost will be determined when the FDIC terminates the receivership.
“Our government invited us and others to step up, and we did,” Jamie Dimon, Chairman and CEO of JPMorgan Chase, said in a press release. “Our financial strength, capabilities and business model allowed us to develop a bid to execute the transaction in a way to minimize costs to the Deposit Insurance Fund.”