JPMorgan Chase has entered into a deal to buy the crisis-hit San Francisco bank First Republic. As per the deal, JPMorgan will pay $10.6 billion to the US Federal Deposit Insurance Corp (FDIC) for most of the assets of the failed bank.
After the mega bank sealed the deal in an auction, CEO Jamie Dimon said the deal concludes one of the most ‘excruciating periods of panic’ for the banking system. “This part of the crisis is over,” Dimon said in a call with analysts on Monday.
Dimon said the acquisition of First Republic by JPMorgan will increase the confidence in the financial industry. “This was the last of the big banks that was teetering … With this behind the industry it should lead to additional confidence that…the acute stress in the system is behind us,” he told Yahoo Finance.
On Sunday, Yahoo Finance had reported that multiple large banks in the US had shown interest in taking over the crisis-hit First Republic after it gets into the Federal Deposit Insurance Corporation’s receivership. According to the report, JPMorgan Chase, Bank of America and PNC had shown interest in participating in the bid for the First Republic. The FDIC had placed a Sunday noon deadline for the submission of the bids.
Following the deal, First Republic’s shares tumbled more than 40 percent on Monday, which means the bank’s shares have lost more than 97 percent of the value this year. JPMorgan shares rose 2.7 percent after the announcement of the deal.