Shafaq News/ First Republic Bank, a California-based financial institution with about $213 billion in assets, has become the third bank to fail this year in the United States, following the collapse of Silicon Valley Bank and Signature Bank in March.
Despite being ranked among the 30 most potent US banks last year, the bank's rescue plan failed, prompting US financial authorities to step in and sell it to JPMorgan Chase.
JPMorgan Chase Chairman and CEO Jamie Dimon said in a statement that the bank was "called upon to step forward" and "our financial strength, capabilities, and business model allowed us to undertake the transition in a way that minimizes the costs to the deposit insurance fund."
The bank said the 84 branches of First Republic Bank, located in eight states, will reopen as branches of JPMorgan Chase Bank starting Monday.
The collapse of First Republic Bank comes after it revealed it had lost over $100 billion in deposits in the first quarter of the year. The bank announced on April 26 that its deposits had plummeted by 41%, to $104.5 billion, even after a group of banks intervened with $30 billion to prevent the regional lender from collapsing. This resulted in a decline in its shares and a planned 20-25% reduction in its workforce during the current quarter of the year.
According to the Washington Post, the assets of Silicon Valley Bank and Signature Bank amounted to $209 billion and $110 billion, respectively, making them among the most potent US banks last year by asset size.
The three collapses are among the four largest collapses of federally insured banks ever recorded. The most significant collapse was Washington Mutual in 2008, following the major economic crisis at that time.
Since 2001, more than 500 banks have failed, most collapsing during the recession after the financial crisis. Yet, despite the scale of these failures, the Federal Deposit Insurance Corporation says that depositors in federally insured banks have been fully protected in all cases.