First Republic Bank (FRB), a major banking partner in the technology industry, has been closed down by the California Department of Financial Protection and Innovation, with the Federal Deposit Insurance Corporation (FDIC) appointed as receiver. JPMorgan has been named as the buyer of its assets and deposits, totalling over $330 billion in total.
In an effort to protect depositors, the FDIC confirmed that JP Morgan, an American financial services company, shall takeover all of First Republic Bank’s customers, assume all deposits, in addition to 84 offices across eight states. Clients’ holdings will continue to be insured by federal insurance, with an estimated cost of about $13 billion to its insurance fund.
This news follows speculation of FRB's collapse, which had caused its stock to plummet. Many actors lost their trust in companies that were associated with the Sillicon Valley Bank, decreasing customers, which contributed to First Republic Bank’s collapse. The Federal Deposit Insurance Corporation acted quickly to prevent other banks from being affected.
The FDIC, JPMorgan Chase Bank, and National Association are also entering an agreement to share the losses and gains on loans for homes and business that the FDIC tookover from FRB. The value and scope of the deal remains unknown.
