JPMorgan Chase Acquires First Republic Bank Following its Failure; Expect Limited Immediate Fallout to the Banking Sector
This commentary reviews the acquisition of First Republic Bank by JPMorgan Chase after its collapse.Key highlights include:
•We view this deal as modestly enhancing JPM’s franchise, as it further advances the Company’s wealth strategy in attractive locations and is complementary to its business banking operations. Furthermore, the transaction is expected to be modestly accretive to earnings.
•Overall, we expect limited immediate fallout from this failure, as the market was well aware of the issues adversely impacting First Republic Bank, who reported very weak results after the market closed on April 24th.
•With JPM’s deal assuming all of First Republic Bank’s deposits, all depositors have been made whole once again, and unlike the failures at Silicon Valley Bank and Signature Bank, the regulators did not need to extend special protection to uninsured depositors.
“The transaction follows a competitive bidding process and is structured as a purchase and assumption agreement with loss share coverage. JPM has a long track record of stepping in during times of stress, including acquiring Washington Mutual during the financial crisis” said John Mackerey, Senior Vice President - Global FIG
JPMorgan Chase is a financial holding company. Through its subsidiaries, the company's segments include: Consumer and Community Banking, which provides services through bank branches, ATMs, digital (including mobile and online) and telephone banking; Corporate and Investment Bank, which consists of Banking and Markets and Securities Services, provides a suite of investment banking, market-making, prime brokerage, and treasury and securities products and services; Commercial Banking, which provides financial solutions, including lending, treasury services, investment banking and asset management products; and Asset and Wealth Management, which is engaged in investment and wealth management.
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