The First Republic Bank on Monday became the third US lender to collapse in less than two months, reported Reuters.

On March 10, the Silicon Valley Bank was shut down by the California Department of Financial Protection and Innovation in the United States. Three days after its collapse, New York-based Signature Bank that had assets more than $110 billion (over Rs 9 lakh crore), had also failed.

The First Republic Bank’s collapse came a week after it disclosed that it had suffered more than $100 billion in outflows in the first quarter of the year and was exploring options, reported Reuters. In the last month, the bank’s stocks had fallen more than 75%, reported NBC News.

Advertisement

Soon after its collapse, the Federal Deposit Insurance Corporation announced on Monday that it had seized the bank. It also announced that JPMorgan Chase, the largest bank in the United States, will be purchasing most of the bank’s assets and deposits, reported the news agency.

On Monday, JP Morgan said that it will pay $10.6 billion (Rs 8,66,28 crore) to the US Federal Deposit Insurance Corporation for most of the assets of the failed bank. JP Morgan has also entered into a loss-share agreement with the Federal Deposit Insurance Corporation on single family, residential and commercial loans it bought.

A loss-share agreement is financial transaction in which the resolution authority or the liquidator agrees to share with the acquirer losses on some specified loans.

Advertisement

JPMorgan will, however, not take First Republic Bank’s corporate debt or preferred stock, reported Reuters.

Efforts to save the First Republic Bank from collapsing were being made since March.

On March 16, eleven of the biggest banks in the US had announced a $30 billion (about Rs 2.47 lakh crore) rescue package for First Republic Bank.

In the rescue package, Citigroup, JPMorgan Chase, Bank of America and Wells Fargo had agreed to each put $5 billion (over Rs 41,226 crore) into First Republic. Morgan Stanley and Goldman Sachs will deposit $2.5 billion (about Rs 20,613 crore)each. The remaining $5 billion would consist of $1 billion contributions from BNY Mellon, State Street, PNC Bank, Truist and US Bank.