JPMorgan Assumes First Republic Bank Deposits with Executives Facing Insider Trading Charges
(2 May 2023 – United States) First Republic Bank has been closed by the California Department of Financial Protection and Innovation which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver as regulators opened an investigation into former First Republic Bank executives to determine any instances of insider trading preceding the collapse.
To protect depositors, the FDIC is entering into a purchase and assumption agreement with JPMorgan to assume all of the deposits and substantially all of the assets of the 14th-largest US commercial bank. The collapse is the second largest banking failure in US history, behind only the Global Financial Crisis (GFC) 2008 collapse of Washington Mutual.
JPMorgan submitted a bid for all of First Republic Bank’s deposits. As part of the transaction, First Republic Bank’s 84 offices in eight states will reopen as branches of JPMorgan Chase Bank. All depositors of First Republic Bank will become depositors of JPMorgan and will have full access to all of their deposits.
As of April 13, 2023, First Republic Bank had approximately US$229.1 billion in total assets and US$103.9 billion in total deposits. The FDIC estimates that the cost to the Deposit Insurance Fund will be up to US$13 billion with the final cost to be determined when the FDIC terminates the receivership.
The status of the Securities and Exchange Commission (SEC) probe is unknown and it is not yet been made public which executives the SEC is investigating. Reuters reported in Q1 2023 that Massachusetts regulators are also investigating First Republic executives for potential insider trading.
“This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system” US regulators said in a statement headed by Treasury Secretary Janet Yellen.