- Their main competitor was the investment fund PNC
- The banking giant after the transaction will increase its weight in the market
Federal Deposit Insurance Corporation approved JPMorgan’s bid to buy First Republic assets. Recall that the crisis of this player caused new turmoil in the stock market. First Republic Bank’s share price fell 43.20% on Friday as the company reported a 40.8% drop in its deposits.
This whole situation has shown that the US efforts to rescue troubled banks are not producing the desired effect. As a result, this time the regulator refused to interfere in the rescue of First Republic Bank and decided to put it under external management.
Consequences of the deal
The purchase makes JPMorgan, the country’s largest bank, even bigger. At the same time, due to expansion, it will be able to further increase its share in the US depository base (previously, this was hindered by the regulator’s limits).
Interestingly, the authorities have constantly declared that they are trying to avoid a banking monopoly. We have heard this rhetoric from Democratic lawmakers and the Biden administration, among other things.
The second interesting point is the active participation of JPMorgan in solving the First Republic Bank crisis. Previously, they advised their colleagues on raising funds for rescue under the FDIC program. But as you can see, these actions did not work.
Now, JPMorgan will buy all assets of First Republic Bank, including uninsured deposits. The FRC currently owns $229.1 billion in assets and $103.9 billion in deposits.