Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co., during a Bloomberg Television interview at the JPMorgan Global High Yield and Leveraged Finance Conference in Miami, Florida, U.S., Monday, March 6, 2023.
Mark Bello | Bloomberg | Getty Images
The crisis that led to the collapse of three US regional banks in recent weeks is largely over after the resolution of First Republicaccording JPMorgan Chase CEO Jamie Dimon.
JP Morgan emerged victorious of a weekend auction for the First Republic after regulators decided the time was up for a private sector fix. The Federal Deposit Insurance Corporation seized the bank, and New York-based JPMorgan announced early Monday that it was acquiring nearly all of First Republic’s deposits and most assets.
“There are only a limited number of banks that were out of the game this way,” Dimon told analysts on a call shortly after the deal was announced.
“There might be another smaller one, but that pretty much solves them all,” Dimon said. “This part of the crisis is over.”
Following the sudden collapse in March of Silicon Valley Bank and Signature Bank, investors punished other lenders who had similar characteristics to SVB. Companies with the highest percentage of uninsured deposits and losses on their balance sheets received the most scrutiny.
The March turmoil revealed mismanagement by some mid-sized banks that were essentially betting that interest rates would not rise; when rates rose, banks were caught “offside” with unrealized losses on bonds on their balance sheets.
But the injection of $30 billion in deposits into the First Republic last month bought time for the sector, allowing mid-sized banks to release first-quarter results in recent weeks which, in many cases, have showed stabilization of deposits. This eased investor fears that many other lenders could soon be taken out.
Shares of regional banks including PacWest and Citizen Financial collapsed in premarket trading.
Ultimately, investors are still exposed to the risks created by Federal Reserve interest rate hikes and their impact on assets, including real estate, Dimon added.