Banking crisis

[~ True Legend ~]

JP Morgan Chase has taken over the troubled US bank First Republic in a deal brokered by regulators.

First Republic: JP Morgan snaps up major US bank

First Republic was seized by regulators, making it the third major US bank to fail in recent months.

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The Federal Deposit Insurance Corporation (FDIC) confirmed in a statement that First Republic Bank had collapsed on Monday.

Investment banking giant JP Morgan will take on all of the deposits and the majority of First Republic's assets.

First Republic is the third US bank to fail in recent months, which has prompted fears of wider banking crisis.

The San Francisco-based lender's shares fell by more than 75% last week after it admitted that customers had withdrawn $100bn (£79.6bn) of deposits in March.

It follows on from the collapse of Silicon Valley Bank (SVB) in March and the demise of another US lender, Signature Bank.

The failed bank's 84 offices in eight states will reopen as branches of JPMorgan Chase Bank from Monday after regulators seized control and immediately sold to the Wall Street institution.

Executives said they expected the acquisition would "modestly benefit" JP Morgan. They said they hoped they would be able to keep the First Republic's customers, boosting their wealth management business.

A deposit flight from some lenders in recent months has forced the Federal Reserve, the US central bank, to step in with emergency measures to stabilise financial markets.

When Silicon Valley Bank and Signature collapsed, the FDIC said it would guarantee all deposits to prevent a rush of people trying to get their money out, which is known as a run on a bank.

 

[~ True Legend ~]

Shares in several regional banks in the US have dropped sharply, as investors fear the banking crisis that has gripped financial markets is not over.

US bank shares slide after First Republic rescue

Shares in several regional banks have dropped sharply, a day after the collapse of First Republic.

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The falls come a day after the collapse of First Republic, which was seized by regulators and sold after worried customers withdrew more than $100bn.

It was the second biggest bank failure in US history and the third since March.

Shareholders were wiped out - and are now eyeing risks at other banks.

The US central bank has raised its benchmark rate from near zero last March to more than 4.75%. It is expected to announce another 0.25% increase this week.

The moves are impacting the US economy, which could hurt banks as businesses and households start to struggle to make debt payments.

Many analysts are worried about risks to banks lurking in the commercial property sector, which has been hit by a fall in demand for office space due to the expansion of remote work.

The rise in interest rates has put some banks in a bind, as higher rates hurt the market value of some debts issued when borrowing costs were lower.