JPMorgan Chase plans to pay the Federal Deposit Insurance Corporation $10.6 billion to acquire most of failed regional bank First Republic.
In a slide presentation detailing the deal, JPMorgan said it has agreed to acquire $173 billion of loans and $30 billion of securities from San Francisco-based First Republic.
The FDIC has agreed to provide a $50 billion five-year fixed-rate term financing as part of the transaction, according to JPMorgan.
Even though the First Republic seizure and takeover was not announced until early Monday, JPMorgan said the transaction has already closed and all regulatory approvals have been received.
JPMorgan, the largest US bank, said it will not assume First Republic’s corporate debt or preferred stock.
US officials are sweetening the deal for JPMorgan, in part by agreeing to limit the big bank’s downside.
JPMorgan said the FDIC will provide loan share agreements on most acquired loans, including 80% loss coverage for seven years on single family residential mortgages. The FDIC has also agreed to 80% loss coverage for five years on commercial loans, including commercial real estate.
For JPMorgan, the deal will increase its exposure to affluent Americans. First Republic catered to rich clients and has branches in Hollywood, Palm Beach and Greenwich, Connecticut.
JPMorgan said the deal ��increases penetration with US high net worth clients” and accelerates its wealth strategy.
