First Republic fails, and is snapped up by JPMorgan Chase

WHEN BRANCHESfdicfdicsvb of First Republic Bank, the latest regional lender to buckle in the face of surging American interest rates, opened on May 1st, they did so as branches of JPMorgan Chase. The banking giant the troubled California-based lender in an auction arranged by the Federal Deposit Insurance Corporation (), a regulator, over the weekend. JPMorgan will assume all of First Republic’s $100bn-odd deposits; losses on the bank’s residential and commercial loans will be shared with the .First Republic began to look vulnerable after the collapse of () in March. Both banks had lots of depositors not covered by federal deposit insurance, who tend to be flighty. And flee many did: First Republic’s deposit base collapsed in the first quarter of the year, from $176bn at the end of 2022 to $104bn at the end of March. The bank turned to expensive short-term borrowing, some of it from the Federal Reserve’s emergency facilities, to . Loans it had made when interest rates were low have slumped in value, leading to worries about its solvency.