BREAKING: First Republic Bank seized by US regulators and sold to JP Morgan Chase

First Republic Bank has been seized by California regulators and sold to JPMorgan Chase in what marks the third US bank failure in just seven weeks.

The California Department of Financial Protection announced in a press release on Monday morning that it had taken possession of the bank and appointed the Federal Deposit Insurance Corporation (FDIC) as the bank’s receiver.

The FDIC has accepted a bid from JPMorgan Chase Bank to take control of all the bank’s deposits including all uninsured deposits and “substantially all assets”.

The drastic move – announced just hours before Wall Street opens – to seize First Republic Bank comes after rescue talks failed to save the institution amid ongoing concerns of a full-scale banking crisis unfolding.

JPMorgan’s chief executive Jamie Dimon said in a statement that “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,” he said.

First Republic’s 84 offices across eight states will reopen for business as normal on Monday morning – but as JP Morgan Chase Bank branches.

JPMorgan’s shares rose 2.6 percent in premarket trading following the news.

First Republic Bank has been under close watch since 10 March when Silicon Valley Bank (SVB) first collapsed, marking the second biggest bank failure in American history.

Two days later, Signature Bank was next to fail and was seized by regulators in New York.

After that, the banking industry and the Biden administration sought to reassure Americans that the nation’s banking system was safe.

The Treasury Department, the Federal Reserve and the FDIC ensured that SVB depositors would have access to their money and people were urged not to pull their deposits from other institutions, which could have potentially led to more runs on banks.

But First Republic Bank was eyed as the next bank expected to fail due to its high amount of uninsured deposits and exposure to low interest rate loans.

In the wake of SVB and Signature Bank’s collapses, the banking industry rallied around First Republic, with 11 of America’s biggest banks extending a $30bn lifeline to try to prevent its collapse.

But those efforts weren’t enough to save it.

First Republic’s dismal quarterly results, released on 24 April, revealed that depositors had pulled more than $100bn – over half of its deposits – out of the bank following SVB’s collapse.

In a desperate bid to turn fortunes around, the bank also announced mass layoffs of around a quarter of its workforce and plans to sell off its unprofitable assets.

Rescue efforts continued down to the wire as the bank’s officials sought to find a way to either save the bank or find a buyer that didn’t involve a government takeover.

Last week, the FDIC then reached out to other big banks – including JPMorgan – giving them up until noon on Sunday to make bids to take over First Republic.

The FDIC estimates that the cost to the Deposit Insurance Fund of covering First Republic’s losses will be about $13bn.