JPMorgan to ‘fight hard’ to retain First Republic clients, CFO says

Dive Brief:

JPMorgan will “fight hard” to retain First Republic clients, JPMorgan Chase CFO Jeremy Barnum said Monday. The promise comes as questions regarding the health of the banking sector have once again flared up following the fourth bank collapse in roughly two months.
Barnum, together with JPMorgan CEO Jamie Dimon, addressed investors during a conference call after the bank announced it had agreed to acquire the “substantial majority” of First Republic’s assets while assuming its deposits from the Federal Deposit Insurance Corp.
The bank is taking steps to remain conservative regarding the potential impact of the deal, Barnum said, noting that “obviously, there are open questions about deposit retention.”

Dive Insight:

While the speed of the transaction happened “relatively quickly” and this is “not the outcome that we necessarily planned for or expected,” Barnum said, the transaction does represent opportunities for JPMorgan.

“The branches we are acquiring from First Republic are in attractive locations and affluent markets, which is an opportunity to accelerate our wealth strategy,” Barnum said during the investor call.

It is not clear whether First Republic executives, including CEO Michael Roffler and CFO Neal Holland, have retained their titles or remain active.

Dimon, for his part Monday, said the banking system is “very stable.”

While he highlighted some key areas ripe for change in the banking industry, it is important to be “very, very thoughtful” about such changes and do so intelligently, because “what you want to do is have a healthier, strong and competitive regional bank and community bank system,” Dimon said.

JPMorgan Chase declined to comment past the details included in its release and investor call.

First Republic’s collapse once again raises questions about the health of the banking industry, especially that of regional banks, as it represents the second-largest bank failure in U.S. history. It comes on the heels of the high-profile failures of Silicon Valley Bank, Silvergate and Signature Bank in March.

The San Francisco-based bank saw a steep drop in deposits in March, falling 35.5% year-over-year to reach $104.5 billion, according to First Republic’s first-quarter earnings.

The drop came even after 11 banks, including JPMorgan, funneled $30 billion into First Republic in March in a bid to keep the lender from failing.