Just days after regulators issued a report on the historic collapse of Silicon Valley Bank, First Republic Bank became the next domino to fall as the regional bank fell into receivership and was quickly sold to JPMorgan Chase.
First Republic Bank became the third regional bank in less than two months to fail — joining SVB and New York-based Signature Bank — as many fear the banking contagion will continue to spread.
While not having the same tight associations with the tech industry as SVB, First Republic Bank did have an expanding technology division and served as the bank of a growing number of startups.
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That likely was one reason the bank moved quickly during the collapse of SVB to shore up its own house, receiving funding from the Federal Reserve Bank and JPMorgan Chase to bring its reserves to $70 billion.
In the end, that was not enough to assure clients, as the bank reported it had lost $102 billion in deposits in the first quarter — more than half of what it held at the end of last year.
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JPMorgan Chase will now take over First Republic’s $229.1 billion of assets and $103.9 billion in total deposits, as well as 84 offices in eight states.
The move likely will not ease concerns in the tech community, as all three banks had significant ties to the industry.
SVB had relationships with more than 50% of all venture-backed companies in the U.S. and countless VC firms, while Signature Bank — mainly known for its real estate division — also had significant venture lending and crypto ties.
It also said SVB’s issues showed “systemic consequences through contagion” that can occur regardless of a bank’s size and role in the financial network.
That becomes truer by the day.
Illustration: Dom Guzman
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