“JP Morgan and PNC Compete to Take Over First Republic Bank Amid Financial Crisis”

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A branch of First Republic Bank in Midtown Manhattan, New York, USA. Reuters Yonhap News

The Wall Street Journal (WSJ) reported on the 28th (local time) that large US banks such as JP Morgan and PNC Financial Services Group have jumped into a bid to take over First Republic Bank, which is on the verge of bankruptcy.

On this day, the news of the imminent intervention of the US financial authorities in the First Republic Bank was reported, followed by the news of the bidding competition among large banks.

Citing sources, the WSJ said that JPMorgan and PNC are competing to participate in the takeover process following the federal government’s seizure of First Republic Bank. The US Federal Deposit Insurance Corporation’s foreclosure and sale process was expected to begin on the 29th or 30th at the earliest.

First Republic, a regional bank in San Francisco, was greatly reeling amid rumors of a regional bank crisis that spread following the bankruptcy of Silicon Valley Bank (SVB) on the 10th of last month. The collapse of the SVB led to a “bank run” by panicked 1st Republic Bank customers, and the bank’s market capitalization declined by 97% over the past month or so.

Eleven large banks, including JPMorgan, started an emergency blood transfusion of $30 billion (about 40 trillion won) to First Republic last month, but the situation did not improve.

In particular, on the 24th, after the results of customer deposits plummeted by 40% ($72 billion) in the first quarter, the bank’s stock price fell by more than 60% in two days. Considering that the bank received $30 billion in liquidity from JPMorgan and others right after the SVB crisis, the amount actually withdrawn by customers is more than $100 billion (approximately 134 trillion won).

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The White House said in a briefing the day before that it was continuing to monitor the situation at First Republic Bank and was ready to intervene immediately if necessary.

Meanwhile, the Federal Reserve System (Fed), the central bank of the United States, announced that the SVB crisis, which shocked the US financial sector, was the result of a combination of the Fed’s failure to supervise and the bank’s poor management.

In its report on the results of its review of the bankruptcy of the SVB, the Fed officially acknowledged responsibility for the situation, arguing that the SVB’s poor management system, lax government oversight, and weak regulation caused the situation.

“The Fed failed to recognize the material severity of its governance, liquidity and interest rate risk management while SVB’s assets more than doubled between 2019 and 2022,” the report said.

2023-04-29 06:00:00
#WSJ #Morgan #PNC #compete #Republic #crisis #bankruptcy

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