U.S. Treasury Seeks to Calm Fears After First Republic Bank Fails

The United States Treasury is insisting the American banking system remains "sound and resilient" after First Republic Bank was closed by regulators on Monday in the second-largest bank failure in U.S. history.

First Republic Bank was seized by California regulators and sold to JPMorgan Chase, which will assume responsibility for all deposits and assets. Depositors with First Republic Bank will have their accounts switched over to JPMorgan Chase and can still access their money.

This is the third central bank failure of 2023, following the collapse of Silicon Valley Bank and Signature Bank.

Jamie Dimon, chairman of JPMorgan Chase, said in a statement: "Our government invited us and others to step up, and we did. 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."

Shares in First Republic, which is based out of San Francisco, collapsed by over 75 percent last week after the bank announced depositors had withdrawn $100 billion during March.

First Republic was closed by the California Department of Financial Protection and Innovation, with the Federal Deposit Insurance Corporation (FDIC) appointed as receiver. It was the FDIC that then organized the sale to JPMorgan Chase, as a result of which all 84 First Republic branches will reopen under the JPMorgan Chase brand.

In a statement, JPMorgan Chase said that as a result of the deal it will take on $173 billion of loans, $92 billion of deposits and around $30 billion in securities from First Republic. The transition is being overseen by Marianne Lake and Jennifer Piepszak, co-CEOs of JPMorgan Chase's Consumer and Community Banking arm.

Lake and Piepszak said: "First Republic has built a strong reputation for serving clients with integrity and exceptional service. We look forward to welcoming First Republic employees. As always, we are committed to treating employees with respect, care and transparency."

First Republic was founded in 1985 and primarily provided banking services to wealthy customers.

In March, Silicon Valley Bank and Signature Bank both failed, leading the Treasury Department to step in and insure depositors in a bid to prevent contagion.

President Biden released a statement in response, saying: "I am firmly committed to holding those responsible for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks so that we are not in this position again."

The Federal Reserve later released a report saying it had concerns about Silicon Valley Bank for two years before its final collapse.

Also in March, Swiss banking giant Credit Suisse was taken over by rival firm UBS in a deal arranged by the Swiss government.

Update 5/1/23, 8:06 a.m. ET: This article was updated with additional information.