US-based First Republic Bank was closed on Monday (local time) by the local regulators and entered into an agreement with JP Morgan Chase Bank to purchase and assume all deposits and assets of the troubled bank in a bid to protect depositors.

“To protect depositors, the FDIC is entering into a purchase and assumption agreement with JPMorgan Chase Bank, National Association, Columbus, Ohio, to assume all of the deposits and substantially all of the assets of First Republic Bank,” US agency Federal Deposit Insurance Corporation said in a statement. JPMorgan Chase Bank, National Association submitted a bid for all of First Republic Bank’s deposits.

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As part of the agreement, First Republic Bank’s 84 offices in eight states in the US will reopen as branches of JPMorgan Chase Bank, National Association starting today. All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, National Association, and will have full access to all of their deposits.

“Deposits will continue to be insured by the FDIC, and customers do not need to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of First Republic Bank should continue to use their existing branch until they receive notice from JPMorgan Chase Bank, National Association, that it has completed systems changes to allow other JPMorgan Chase Bank, National Association, branches to process their accounts as well,” FDIC said.

As of April 13, 2023, First Republic Bank had approximately USD 229.1 billion in total assets and USD 103.9 billion in total deposits. In addition to assuming all of the deposits, JPMorgan Chase Bank agreed to purchase “substantially” all of First Republic Bank’s assets.

One of the most prominent lenders in the world of technology startups, Silicon Valley Bank, which was struggling, first collapsed on March 10, after a run on the bank by the depositors. Its closure led to a contagion effect and the subsequent shutting down of other banks, including First Republic Bank.

The collapse of a few regional banks in the US, which started with Silicon Valley Bank, has sent ripples across the global banking industry and posed fears of a contagion effect across economies.