JPMorgan Chase Set to Acquire First Republic Bank

JP Morgan Chase & Co. will acquire failed First Republic Bank in a strategic move to expand its high-net-worth client base and enhance its wealth management services. 

Here are 6 key points you must know about the deal:

✅ JPMorgan will take over majority of First Republic's assets, including about $173 billion of loans and $30 billion of securities plus $92 billion in deposits (inclusive of $30 billion of large bank deposits).

✅ The bank expects gains worth $2.6 billion and will not assume First Republic’s corporate debt or preferred stock. All deposits will remain protected under the 'systemic risk' exemption $250,000 guarantee limit. 

✅ US regulator, Federal Deposit Insurance Corporation (FDIC) engineered the deal with Guggenheim securities as their financial adviser under which JP Morgan will pay the FDIC $10.6bn 💰

✅ The acquisition will provide JPMorgan with access to First Republic's affluent high net worth clientele and generate significant synergies for JPMorgan to advance their wealth strategy and leverage First Republic's expertise in bespoke financial services. 

 

✅ Anticipated to complete by the end of 2023, this would be the largest acquisition by JP Morgan since it acquired Bear Stearns during the financial crisis.

✅ First Republic Bank’s fate got sealed after it reported in Q1 2023 earnings that customers had pulled out more than $100bn in deposits that prompted the FDIC to take charge and start identifying bidders. Other interested parties in the initial run were Bank of America, PNC Bank and Citizens Bank

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