First Republic, a failed bank, is put into receivership and sold to JP Morgan, America’s largest bank. California regulator DFPI made the announcement on Monday.
The fate of the mid-sized U.S. bank has been hanging in the balance since March after two U.S. banks, Silicon Valley Bank and Signature Bank, went bankrupt earlier this year.
Read more about Silicon Valley Bank here:
Second largest bank failure in US history
First Republic, a San Francisco-based financial institution, has been hit by rising U.S. interest rates, which must combat high inflation but lower interest rates that will reduce the value of outstanding loans. As customers withdrew their money from the bank in bulk, there was a liquidity problem. First Republic shares lost another 48 percent of their value last weekend. Now the curtain has finally fallen.
The US Financial Services Agency, which is acting as receiver in the case, has been actively looking for a buyer since last week. It has now been discovered: the deposits of the First Republic and most of its assets are being sold to the largest in the United States, JP Morgan Chase.
The transaction marks the second largest bank failure ever in the United States.
First Republic specialized in private banking for wealthy clients and provided venture capital, similar to Silicon Valley Bank. As of July 2020, the bank was the fourteenth largest in the United States, according to its own data, with eighty offices in seven states. First Republic Bank had 7,200 employees at the end of last year. (Belgium)
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