By Natalia Rueda 
The US financial authorities have announced that they have taken possession of Californian bank First Republic Bank and that it will be acquired mostly by the entity JPMorgan Chase, in order to close a banking crisis that began in March.
The Federal Deposit Insurance Corporation (FDIC) and the US Treasury contacted six banks last week to probe their interest in buying First Republic’s assets. The FDIC, the regulator in charge of guaranteeing bank deposits, reported on Monday that it adopted the measure to protect the accounts.
The federal government intervened in order to protect depositors. It entered into a takeover agreement with JPMorgan Chase Bank, National Association, Columbus, Ohio, to assume all deposits and substantially all of First Republic Bank’s assets. The FDIC estimated that the cost of covering First Republic’s losses will amount to about $13 billion.
As part of the agreement, the California Department of Financial Protection and Innovation (DFPI) appointed the FDIC as receiver of First Republic, which will be sold immediately to JPMorgan Chase. JPMorgan will assume “all deposits, including uninsured ones, and most assets,” the DFPI reported.
The takeover of First Republic Bank is the second largest bank in terms of assets to collapse in US history, after the failure of Washington Mutual in 2008, excluding investment banks such as Lehman Brothers. The FDIC said that the takeover of First Republic is necessary to protect the public interest and to prevent further losses to the FDIC’s Deposit Insurance Fund.
This takeover is seen as a positive step to help stabilize the US banking system. The FDIC noted that JPMorgan Chase has the financial resources and expertise to ensure the transition is smooth and seamless for customers. It is also seen as a sign that the US financial authorities are willing and able to intervene when needed to protect the public interest and the banking system.