What JPMorgan Chase Acquisition of First Republic Means for Your Money

What happened

JPMorgan Chase took over the failed First Republic Bank today in a deal brokered by the FDIC. First Republic branches will reopen under the JPMorgan Chase name, and customer accounts will switch across to the banking giant. "All depositors of First Republic Bank will become depositors of JPMorgan Chase Bank, National Association, and will have full access to all of their deposits," said a FDIC press release.

So what

Today's move comes after a weekend of intense negotiations after the FDIC sought bids from several banks. First Republic has been struggling to stay afloat following the collapse of Silicon Valley Bank, which sent shockwaves through the financial system. According to First Republic's Q1 earnings report, released in April, customers withdrew over $100 billion in deposits in the first quarter of this year. This, combined with higher interest rates, destabilized the bank to the point of collapse. 

Not only is First Republic the third major bank to fail this year, the total assets managed by failed banks is already significantly higher than in any year since 2000. For many Americans, this raises questions about whether other banks are still at risk, and how safe their money actually is.

Now what

If you have a bank account with First Republic, you may be wondering what will happen to your funds. It's important to know your money is safe. Your account will be transferred to JPMorgan Chase, which will reach out to you with more information.

If you're worried about a knock-on effect on funds held with another bank, it's worth pointing out that so far no banking customers have actually lost money. When a bank fails, there are several measures in place to safeguard customer money. So far, they have worked. These include FDIC insurance, which covers each depositor for at least $250,000 per bank. The role the FDIC has played in the JPMorgan Chase acquisition is another example of these protections in action.

There's been a mixed reaction from the banking community to today's news. Some analysts argue that further small to mid-sized banks could fail, particularly those with similar vulnerabilities. Critics have also raised concerns that the deal strengthens banks and creates an unfair competitive environment. On the other side, President Biden says the deal will ensure the banking system is "safe and sound." Other analysts believe further contagion is now unlikely.

If this does not reassure you, one key step you can make is to check that your account is FDIC insured. If you hold more than $250,000 in a bank account, make sure you understand the FDIC limits. For example, the coverage is per person so a joint account could be protected for up to $500,000. You might consider moving some money to a new bank account if you have uninsured funds.