Regulators seized control of First Republic Bank early Monday, making it the third financial institution taken under government control this year, then promptly accepted a bid from JPMorgan Chase for virtually all of the lender's assets.
The state's Department of Financial Protection and Innovation (DFPI) said it had taken over San Francisco-based First Republic and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. The DFPI also said the FDIC has "accepted a bid from JPMorgan Chase Bank, National Association, Columbus, Ohio, to assume all deposits, including all uninsured deposits, and substantially all assets of First Republic Bank."
The DFPI said it acted under California law regarding a financial entity the law describes as "conducting its business in an unsafe or unsound manner" and being in a "condition that … is unsafe or unsound" to carry out banking business.
Federal officials from the FDIC, Treasury Department and Federal Reserve held private talks with other banks on Friday hoping to find a bailout plan for First Republic, Reuters reported, but no private rescue materialized. Takeover talks continued all weekend in the hope a deal could be struck before U.S. stock markets opened Monday.
Before entering receivership First Republic shares had lost 97% of their value since January, taking more than $21 billion off First Republic's market value.
JPMorgan CEO Jamie Dimon said in a statement on Monday that U.S. government officials had invited the company, the biggest U.S. bank with $3.7 trillion in assets, along with other lenders, to "step up, and we did."