- The PNC investment fund was their main competitor
- The banking giant will increase its weight in the market after the deal
The Federal Deposit Insurance Corporation approved JPMorgan’s bid to buy the assets of First Republic.
Recall that the crisis of this player caused new turmoil in the stock market. First Republic Bank’s share price fell 43.20 percent Friday as the company reported a 40.8 percent drop in its deposits.
This situation showed that U.S. efforts to bail out troubled banks are having little effect.
As a result, this time the regulator refused to intervene in First Republic Bank’s bailout and decided to put it under external management.
The implications of the deal
The purchase makes JPMorgan, the nation’s largest bank, an even bigger. At the same time, through the expansion it will be able to further increase its share in the U.S. depository base (previously it was prevented by regulatory limits).
It is interesting that the authorities have consistently declared that they are trying to avoid a banking monopoly.
That’s the kind of rhetoric we’ve heard from Democratic lawmakers and the Biden administration, among others.
A second interesting point is JPMorgan’s active involvement in the First Republic Bank crisis.
Previously, they advised their peers on raising funds for the FDIC bailout. But as you can see, these actions have failed.
Now JPMorgan will buy out all of First Republic Bank’s assets, including uninsured deposits. The FRC currently has $229.1 billion in assets and $103.9 billion in deposits.