Effect of The Purchase of First Republic Bank

US President Joe Biden has tried to guarantee Americans that the US banking sector is “safe and sound” after regulators clutched California’s First Republic Bank, which JPMorgan Chase purchased in hopes of ending the two-month crisis end.

On Monday afternoon, Biden praised regulators’ move to facilitate the bank’s sale, saying the move “will ensure all depositors are secured, and taxpayers will not be held liable.”

“These measures will ensure the banking system is safe and sound, which involves protecting small businesses across the country,” Biden said at a White House news briefing for National Small Business Week.

First Republic is the third major US financial institution to collapse in two months. Its sale to JPMorgan, the country’s largest bank, is intended to ease recent concerns about a broader crisis in the banking system.

The deal, announced Monday morning, sees JPMorgan make a $10.6 billion payment to the US Federal Deposit Insurance Corp (FDIC) to take charge of most of the assets owned by the San Francisco-based bank and access the First Republic’s wealthy and coveted client base.

Effect on Banking Sector

The First Republic has come under severe pressure after announcing last week that it has lost more than $100 billion in the first quarter and reviewing options.

It has also reignited tensions in a banking sector teetering after the shutdowns of Signature Bank and Silicon Valley Bank in March, while UBS purchased the Swiss Lender Credit Suisse in a state-sponsored takeover.

The FDIC said Monday morning that 84 First Republic branches in 8 states would take up as branches of JPMorgan Chase Bank, and those that deposited money will have complete access to their deposits.