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Regulators Seize First Republic Bank, Sell It to JP Morgan Chase in Attempt to Prevent Further Banking Turmoil

Published: May 1, 2023
People walk past a First Republic bank in Manhattan on May 01, 2023 in New York City. In a deal announced early Monday, JPMorgan Chase is buying most assets of First Republic Bank. The deal, which protects the deposits of First Republic’s customers, comes after the nation’s second-largest bank failure ever. (Image: Spencer Platt/Getty Images)

United States regulators seized embattled First Republic Bank early on Monday, May 1 and sold the bank’s deposits and the majority of its assets to JPMorgan Chase Bank in an attempt to stave off further banking turmoil in the United States. 

The bank, based in San Francisco, is the third midsize bank to fail in the U.S. in two months and the second-largest bank to fail in U.S. history. The largest bank to ever fail in the U.S. was Washington Mutual which collapsed during the height of the 2008 financial crisis. Washington Mutual was also taken over by JPMorgan. 

First Republic has been struggling since March this year when Silicon Valley Bank and Signature Bank both failed. Both investors and depositors feared the bank would fail due to a high amount of uninsured deposits and exposure to low interest rate loans. 

Early on Monday, the Federal Deposit Insurance Corporation (FDIC), said that First Republic’s 84 branches, spread across eight states, will open as JPMorgan Chase Bank branches and that all depositors will have full access to their deposits. 


Last week and over the weekend, regulators scrambled to find a solution to the bank’s problems prior to stock markets opening on Monday and solicited bids for First Republic’s assets. 

According to the FDIC, as of April 13, First Republic had around $229 billion in total assets and approximately $104 billion in deposits and the regulator believes that the deposit insurance fund will be on the hook for around $13 billion due to the bank’s failure.

Silicon Valley Bank cost the fund a record $20 billion in March.

First Republic was once the envy of the industry, catering to high net worth clients who rarely defaulted on their loans. The bank made most of its money by providing low-cost loans to the wealthy, including Meta CEO Mark Zuckerberg. 

In the first quarter of 2019, First Republic saw its total assets more than double from $102 billion when its workforce was approximately 4,600.

However, like Silicon Valley and Signature Bank, most of these deposits were uninsured, worrying both analysts and investors. The FDIC typically only insures deposits up to $250,000.

Fears spiked following the bank’s most recent quarterly report, prompting a run on the bank when depositors rushed to withdraw more than $100 billion in deposits.

“First Republic’s demise was fueled by the speed of social media and digital withdrawals that can be made in seconds from a cell phone,” CTV News reported. 

In mid-March First Republic received $30 billion in funding from a group of large banks to help stop the bleeding and planned to sell off unprofitable assets, like low interest mortgages that it had provided to wealthy clients. It also planned to shed up to a quarter of its workforce to save money. First Republic had approximately 7,200 employees near the end of 2022. 

Investors did not have high hopes for the plan and, following a dismal quarterly report, began their exit from the bank. 

Last week, First Republic’s share price plummeted 75 percent closing at just $3.51 a share on Friday. On March 8, shares in the bank traded at $115.