JPMorgan Chase Emerges as Buyer for First Republic Bank

admin May 1, 2023

0 7 minutes read

Goodbye, First Republic.Hello JP Morgan

First Republic no longer exists. Regulators seized the troubled lender overnight and sold it to JPMorgan Chase. His second-biggest bank failure in America now, after the 2008 Washington Mutual collapse, saw 84 bank branches that closed as his Republic branches on Friday reopen as Chase branches on Monday. means

transaction Negotiations have been raging in recent days to resolve the fate of the First Republic, which has been unable to recover from the turmoil caused by the failure of Silicon Valley Bank in March. We want to put an end to the crisis.

JP Morgan won the weekend’s auction. It beats out other competitors, including PNC Financial Services. As part of the deal, JP Morgan will underwrite most of First’s Republic assets, including $173 billion in loans, his $30 billion in securities, and $92 billion in deposits.

This eliminates the need for the FDIC to pursue a larger bailout. You don’t have to worry about having to cover First Republic’s nearly $50 billion in uninsured deposits. (The FDIC still estimates that its insurance fund will take a $13 billion hit from him, and the agency has reached a loss-sharing agreement with JP Morgan for some loans.)

The auction is another twist on the story of the First Republic. JP Morgan was initially an adviser to troubled lenders, and its CEO, Jamie Dimon, persuaded other large bank counterparts to give First Republic $30 billion as a lifeline in March. I persuaded him to keep the

But the plan failed to stabilize lenders who announced last week that they lost $100 billion in deposits in the first quarter. The news took a toll on First Republic’s stock, with its market value falling to just $650 million on Friday from $20 billion a month ago, ready for a sale.

Mr. Dimon is once again playing the role of a bank rescuer, After acquiring Bear Stearns and WaMu in 2008. (He later repeatedly complained of the political and legal blows from these deals.)

Earlier in the weekend, some speculated that PNC was a strong contender to acquire First Republic, as JPMorgan’s win would make the nation’s biggest lender even bigger. But in a statement Monday, the FDIC said it chose the lowest cost transaction for the government, as required by banking regulation. Nonetheless, some progressive lawmakers may still be grumbling about a deal that would further strengthen Dimon’s bank as a lending giant.

JP Morgan shares rose nearly 3% in pre-market trading at 7 a.m. ET.

Here are the questions we still have, Has the regulator waived caps for JP Morgan to take more deposits, and are there agreements to protect banks from liability? Other bidders such as Bank of America Why did it drop out of the auction, and will the short-selling stock that was aimed at First Republic go to the stock of lenders in other regions?

this is what is happening

Charlie Munger warns about bad loans in US banks. Berkshire Hathaway vice chairman tells Financial Times that American lenders sitting on a troubled commercial mortgage Banks that had been vulnerable as property prices fell took a toll on these banks. Munger, 99, also said investors should expect much lower returns than before.

SoftBank Takes Big Step Towards Blockbuster Arm IPO Japanese tech giant said Documents submitted confidentially Listing the semiconductor designer on U.S. Arm is one of the biggest public market debuts of the year, with the offering expected to seek at least $8 billion in revenue, after a downturn that has plagued the IPO market. Aim to break down.

Pope Francis has revealed a secret ‘mission’ to bring peace to Ukraine. The pope told reporters he was working to end the Russian aggression, but few believed that both sides were ready to lay down their weapons. He added that he was doing “everything humanly possible” to return the children to Russia.

Hollywood writers are on the verge of going on strike. Members of the Writers Guild of America may quit their jobs on Tuesday, the first shutdown for the film and television industry in 16 years.the writer has forced to make economic concessions From studios taking into account the changes brought about by the rise of streaming

Stocks rise despite ‘more difficult conditions’

A surprise parade of last month’s earnings results was enough to push the stock market higher, even as turmoil in the banking sector and the cost of living crisis reignited recession fears.

That execution could be tested this week. Central banks on both sides of the Atlantic are expected to raise interest rates again as they struggle to keep inflation under control. Investors will also be watching Friday’s nonfarm payrolls report closely for signs of how the labor market is holding up as the economy slows.

Blue chip stocks were big winners in April. of Dow Jones Industrial Average rises Last month was 2.5%, the best one-month performance since January. The S&P 500 rose 7.5% in the first quarter, but last month he was up 1.5%.

Meanwhile, the Nasdaq Composite rose 0.1% in April. The tech-heavy index ended the month with a strong record, helped by better-than-expected results in Meta and Microsoft’s major digital advertising and cloud businesses last week.

Investors poured $1.2 billion into tech stocks in the first four weeks of April, according to Bank of America data. This is his highest level since November.

But investors mostly buy only a handful of names. The top seven tech stocks by market capitalization, including Apple, Microsoft and Google, are up 31% year-to-date through Thursday’s market close, compared with other stocks in the S&P 500, up 3%, according to BofA calculations. Did.

Michael Hartnett, chief investment strategist at Bank of America, is one reason why the stock market is likely to stall as the economy slows further and corporate earnings falter. is in this narrow focus.

The CEO himself is by no means bullish, According to Lori Calvasina, head of U.S. equities strategy at RBC Capital Markets, an analysis of the earnings call found that “companies’ comments are a reflection of the idea that a more difficult period is beginning and that it will provide a buffer. It supports both the idea of being fairly gentle with the pockets of strength it provides.”

ICYMI: Dorsey regrets Musk

Before Elon Musk agreed to buy Twitter for $44 billion last year, the billionaire had few champions as open and rare as his fellow tech mogul Jack Dorsey. . The Twitter co-founder famously called Mr. Musk “the only solution I trust.”

Fast forward a year, Mr. Dorsey is having second thoughts About Mr. Musk taking over the company.

“I think he should have left.” Dorsey wrote a series of posts on the decentralized social network Blue Sky, which he sponsors. (Last summer, Mr. Musk threatened to back out of the offer before agreeing to the deal.)

Musk hasn’t done the “right thing” during his seven-month tenure as Twitter’s workforce plummeted after layoffs, advertiser exits and the launch of the Twitter Blue subscription got off to a rocky start. I wrote.

Dorsey also held Twitter’s board accountable — he was a director until May 2022 — for forcing Musk to complete his bid. But Dorsey dismissed responsibility, writing that “every company is for sale to the highest bidder,” adding, “I had the final say? No.”

“And I think Fox is honest, fair, and sincere. …but he could be sued for defamation.”

— President Bidenafter skewering Fox News at the White House Correspondents’ Association dinner Saturday night, the network fired its star and longtime Biden pundit Tucker Carlson and filed a $788 million defamation lawsuit. reconciled.

one week before

This week is jam-packed with spotlighting interest rates, employment, inflation data and a slew of earnings reports. Here’s what you should see:

Tuesday: AMD, Ford, Starbucks and Uber report quarterly results. Economists take a closer look at the Eurozone consumer price data release. Hot numbers could force the European Central Bank to hike rates more aggressively later in the week.

Wednesday: Decision date of the Federal Reserve Board. In the futures market this morning, the central bank has raised interest rates by a quarter of a percentage point. But will the Fed do it again in June, or will it finally pause?

Thursday: Now it’s the ECB’s turn. Market watchers are wondering if the ECB will raise interest rates by a quarter of a point or even a half. Anheuser-Busch InBev and Apple report earnings.

Friday: It’s work day. Economists surveyed by Bloomberg said the number of new hires jumped to his 180,000 last month, down from an increase of 236,000 in March. Rare IPO news: Johnson & Johnson spin-off consumer healthcare giant Kenvue Set to start trading.

Saturday: Today is Coronation Day in England, and the coronation of Charles III is expected to draw hundreds of millions of viewers around the world.

speed lead

bargain

An executive at Silicon Valley Bank said in November,project phoenixplans to sell $20 billion worth of bonds at a significant loss. (FT)
Subway’s takeover offer reportedly approaching $10 billion, with the help of a debt financing plan arranged by JP Morgan Chase, the sandwich chain’s financial advisor. (Reuters)
Filed by Qatari businessman and British billionaire final takeover bid for Owners of English football club Manchester United may still choose not to sell. (Bloomberg)
Deutsche Bank is hire more investment bankersIncludes Credit Suisse as we are betting on M.&A recovery. (FT)

policy

Judge Samuel Alito said:pretty good ideaLast year, he leaked the draft opinion of the Supreme Court that overturned the Roe v. Wade case. (WSJ)
Republican presidential candidate Asa Hutchinson criticized the efforts of her main rival, Florida Governor Ron DeSantis, to fight Disney, saying:not the role of government” To punish business with which you disagree. (insider)
‘Young Workers Needed, Feds Relax Rules on Past Drug Use’ (NYT)

best of the rest

Goldman Sachs’ top lawyer, former CIA director, and academic Noam Chomsky are some of the prominent figures. Jeffrey Epstein’s private calendar. (WSJ)
Alibaba co-founder Jack Ma said Monday Tokyo College Visiting Professor, offers seminars on entrepreneurship. (FT)
“In San Francisco, a difficult year at Whole Foods Market reflects the city’s predicament.” (NYT)
Uber’s annuallost and found index‘ includes fake blood, a Danny DeVito Christmas ornament, and a slushy machine. (insider)