Regulators have seized control of First Republic Bank and sold it to JPMorgan Chase, a dramatic move aimed at curbing a two-month banking crisis that has rattled the financial system.
First Republic, whose assets were battered by the rise in interest rates, struggled to avoid a government takeover after two other lenders collapsed last month, spooking depositors and investors.
As part of a deal announced early Monday after officials scrambled over the weekend, First Republic was taken over by the Federal Deposit Insurance Corporation and immediately sold to JPMorgan.
On Monday, 84 First Republic branches in eight states will reopen as JPMorgan branches.
JPMorgan will “assume all of the deposits and substantially all of the assets of First Republic Bank,” the F.D.I.C. said in a statement. The regulator estimated that its insurance fund would have to pay out about $13 billion to cover First Republic’s losses.
First Republic failed despite having received a $30 billion lifeline from 11 of the country’s largest banks in March. It will go down in history as the second largest U.S. bank by assets to collapse after Washington Mutual, which failed during the financial crisis of 2008.
The government’s takeover and sale of First Republic comes seven weeks after the government took control of Silicon Valley Bank and Signature Bank, whose failures sent a shock wave through the industry and raised fears that other regional banks were at risk of similar runs on deposits.
Many banking experts said First Republic’s travails were a delayed reaction to the turmoil in March rather than the opening of a new phase in the crisis. Investors and industry executives are optimistic that no other midsize or large lenders are at risk of imminent failure. As First Republic’s stock plunged anew last week, other bank stocks barely budged.
Even so, the U.S. financial system has plenty of problems. The recent bank failures and rising interest rates have forced banks to rein in lending, making it harder for businesses to expand and individuals to buy homes and cars. That is one of the reasons that the economy has been slowing in recent months.
This is a developing story. Check back for updates.
Rob Copeland contributed reporting.
