FirstFT: The second largest bank failure in US history

After days of speculation over the future of the First Republic and a frenetic weekend of negotiations, it was announced today that the US bank was to close and its $93.5 billion deposits and most of its assets were to be sold. JPMorgan Chase, which led an effort to save the First Republic a month ago, is to acquire most of the embattled lender.

The agreement means that all depositors, including those above the $250,000 insurance limit, will retain access to their money when the bank opens this morning. However, the Federal Deposit Insurance Corporation estimated its insurance fund losses to be approximately $13 billion.

First Republic assets were hit hard by rising interest rates and had been struggling for two months. Its shares have lost more than 97% of their value this year, while the bank revealed last week that it had suffered more than $100 billion in deposit outflows in the first trimester. Concerns about regional banks had increased after the collapse of Silicon Valley Bank.

JPMorgan had tried to stabilize the San Francisco-based lender, bringing together a group of 11 banks that paid $30 billion in deposits. With that lifeline failed, First Republic became the second-largest bank failure in U.S. history, after Washington Mutual in 2008.

“Our government called on us and others to step in, and we did,” JPMorgan chief executive Jamie Dimon said. “Our financial strength, capabilities and business model allowed us to develop an offer to execute the transaction in a manner that minimized costs to the deposit insurance fund.”

Here’s what else I’m watching today:

• Help: Financial markets in the UK, France, Germany, South Africa, Switzerland and other countries are closed today.

• White House: US President Joe Biden welcomes his Filipino counterpart Ferdinand “Bongbong” Marcos Jr for a bilateral meeting after the two countries recently held their largest joint military exercises in 30 years.

Five other top stories

1. Exclusive: Deutsche Bank plans to expand investment banking advisory team significantly and has already recruited 26 chief executives in the past two months, including several from collapsed rival Credit Suisse. Read the full story.

2. Brazil’s Congress is set to pass controversial legislation to curb the spread of “fake news”. The measure was quickly adopted by the government led by President Luiz Inácio Lula da Silva, but critics were unhappy. I found why.

3. Jack Ma takes a teaching job in Japan starting today, as the charismatic Chinese entrepreneur begins to regain a public profile after largely disappearing from view during Beijing’s crackdown on tech. Here’s what he’ll do.

4. US biotech group Iveric Bio is acquired by Astellas Pharma, marking the latest acquisition by Japanese companies looking for growth outside their home market. The deal values ​​Iveric, formerly known as Ophthotech, at around $5.9 billion, the Japanese drugmaker. biggest acquisition ever.

5. Fighting in Sudan has potential to be ‘worse than Ukraine’ for civilians, according to the UN. Amina Mohammed, deputy general secretary, said the Sudanese army and its rival paramilitary group were leading a blind battle for Khartoum, and she feared massive casualties.

The big read

The golden age of investing is over and investors face a period of declining returns, warned Charlie Munger, in a broad and stimulating interview with Eric Platt and Harriet Agnew. The 99-year-old investor – sidekick to billionaire Warren Buffett – warned of a storm brewing in the US commercial real estate market, with US banks “full” of what he described as ” bad loans”.

We also read. . .

Card of the day

The costs of high, entrenched inflation in the UK cannot be ignored. The Bank of England may not be able to fix everything, but it must be under controlwrites Martin Wolf.

Take a break from the news

Don’t miss this delicious — and fragrant — horticulturist’s green guide to new york. And share your favorite New York florist or public garden in the comments below..

Additional Contributions by Annie Jonas and Tee Zhuo