First Republic Bank, a California-based lender that catered to wealthy clients, has been seized by the Federal Deposit Insurance Corp. (FDIC) after being unable to recover from a flood of customer withdrawals and declining asset prices. JPMorgan Chase & Co. has struck an agreement with the US regulator to take over the bank’s assets, including $173 billion of loans and $30 billion of securities, as well as $92 billion in deposits. Talks to rescue the lender had dragged on for weeks before the agreement was reached. First Republic Bank’s $229 billion of assets as of April 13 puts it just behind Washington Mutual Inc., which collapsed in 2008 with $307 billion in such holdings and total deposits of $188 billion.
This marks the third major bank failure in the past few weeks, following the collapses of Silicon Valley Bank and Signature Bank in early March. For just over a month, Silicon Valley Bank was the second-largest bank failure in US history until First Republic Bank was seized by the FDIC. Silicon Valley Bank had $167 billion of assets around the time of its failure.
While JPMorgan has agreed to take over First Republic Bank’s assets, it remains to be seen what will happen to its wealthy clients, who made up a significant portion of the lender’s customer base. The collapse of First Republic Bank highlights the impact of customer withdrawals on financial institutions, particularly during times of economic uncertainty.
