With $229.1 billion in total assets at the time of closure, First Republic Bank has become the second-largest bank failure in American history. The post Four US Bank Failures in Four Months, is the Wave Over? appeared first on Tokenist.
Join us in showcasing the cryptocurrency revolution, one newsletter at a time. Subscribe now to get daily news and market updates right to your inbox, along with our millions of other subscribers (that’s right, millions love us!) — what are you waiting for?
First Republic Seized After Bank Loses 40% of Deposits in Q1
In a Monday press release, the FDIC announced that First Republic Bank had been seized. The federal agency added that JPMorgan, the largest bank in the US and the world’s largest bank by market capitalization, has agreed to purchase most of the bank’s assets and deposits.
With $229.1 billion in total assets at the time of closure, First Republic Bank has become the second-largest bank failure in American history. The bank also becomes the fourth major US lender to fail in the past four months.
First Republic sought to sell up to $100 billion of loans and securities to restructure its balance sheet. However, the lender had ruled out a sale to another bank. JPMorgan Chase CEO Jamie Dimon said in a statement:
“Our government invited us and others to step up, and we did. Our financial strength, capabilities, and business model allowed us to develop a bid to execute the transaction in a way to minimize costs to the Deposit Insurance Fund.”
As of Monday, First Republic’s 84 branches in eight states will reopen as branches of JPMorgan Chase. The FDIC estimates that the cost of First Republic’s receivership will be around $13 billion, less than the $20 billion estimated to be the cost of Silicon Valley Bank’s failure.
First Republic Becomes 4th US Lender to Collapse in 2023
Just two days after the collapse of Silvergate, SVB Financial Group, one of the most popular lenders to Silicon Valley tech and growth startups, suffered from a bank run. Subsequently, the FDIC took control of the bank and started exploring the sale of the lender’s assets.
Bank Collapses Come in Waves
Between 1941 and 1979, an average of 5.3 banks failed a year. There was an average of 4.3 bank failures per year between 1996 and 2006 and 3.6 between 2015 and 2022. Before the recent collapses of Silvergate Bank, Signature Bank, and First Republic Bank, it had been over two years since the last bank failure.
A century ago, the picture was very different. FDIC figures show an average of 635 banks failed each year from 1921 to 1929. These were mostly small, rural banks, which were common because many states limited banks to a single office.
The Great Depression ravaged the nation’s banking industry. Between 1930 and 1933, more than 9,000 banks failed across the country, and this time many were large, urban, seemingly stable institutions.
The recent wave of banking collapses in the US has led some to compare the current situation to bank crises of the past. This has also raised concerns about whether the nation may be headed for a new widespread banking crisis, particularly given that US bank failures usually come in waves.
Do you think more banking failures are coming? Let us know in the comments below.