JPMorgan Chase scoops up First Republic Bank, but banks shares still slide

JPMorgan Chase reached a deal to acquire First Republic Bank but investors are still jettisoning US banking stocks

PacWest, a regional US bank, was the hardest hit in yesterday’s trading closing nearly 30 per cent down. 

JPMorgan Chase acquired the substantial majority of assets after First Republic Bank’s collapse over the weekend, the second largest bank failure in US history, raising broad concerns over how stable the US banking system is in the face of multiple headwinds.

With $3.7trn in assets and $303bn in stockholders’ equity, JPMorgan Chase is one of the world’s largest banks as well as a growing force in the fintech world. 

“Our government invited us and others to step up, and we did,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase.  

“Our financial strength, capabilities and business model allowed us to develop a bid to execute the transaction in a way to minimize costs to the Deposit Insurance Fund.”

“This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise,” Dimon added.

The acquisition includes approximately $173bn of loans and approximately $30bn of securities as well as having liabilities of $92bn of deposits, including $30bn of large bank deposits, which will be repaid immediately. 

The acquired First Republic businesses will be overseen by JPMorgan Chase’s Consumer and Community Banking (CCB) Co-CEOs, Marianne Lake and Jennifer Piepszak.