JPMorgan Chase will buy First Republic Bank’s assets after the FDIC acquisition. US stock futures were flat heading into the week highlighted by the April jobs report and the Federal Reserve’s decision to raise interest rates. Here’s what investors need to know today.
1. FDIC Acquires First Republic and Sells Assets to JPMorgan Chase
The Federal Deposit Insurance Corporation has taken control of First Republic Bank and agreed to sell most of its assets to JPMorgan Chase, in the second largest banking failure in US history. JPMorgan Chase will take $92 billion in deposits, $173 billion in loans and $30 billion in securities from First Republic, which has lost $100 billion in deposits since the Silicon Valley collapse in March. After collecting bids for the bank over the weekend, organizers hope the deal will stop further turmoil in the banking sector.
2. Munger sees risks in the commercial real estate market
Investor Charlie Munger said the commercial real estate market presents a serious risk for US banks, which are loaded with “bad loans” that will become liabilities as real estate values drop. The risks aren’t as severe as the 2008 financial crisis, said Munger, an investment partner for Warren Buffet at Berkshire Hathaway, but they helped prevent the investment firm from taking a more active role in the current banking turmoil.
3. Economic concerns have driven down oil prices despite OPEC+ cuts
Concerns about the Federal Reserve raising interest rates and weak Chinese manufacturing data are helping to push oil prices lower heading into the week. WTI traded almost 2% lower at just over $75 a barrel after economic conditions undermined the recent surprise announcement by OPEC+ to cut oil production in an effort to help keep prices higher before a potential loss in oil demand. from the economy. Slower.
4. The financiers behind the subway sale offer a $5 billion debt plan to encourage bids
JPMorgan Chase, which operates the sale of sandwich chain Subway, is offering a $5 billion debt financing plan to help encourage more bids for the restaurant franchise. Subway announced in January that it was exploring a sale, but so far, none of the bids have reached the company’s valuation at more than $10 billion. Higher interest rates have made selling more difficult, as debt has become more expensive, but JPMorgan Chase bankers are hopeful that the debt financing scheme will encourage companies to bid higher for Subway.
5. The Japanese company Astellas Pharma concludes a deal to buy the US-based Iveric Bio
Japan’s Astellas Pharma has agreed to buy New Jersey-based Iveric Bio for $5.9 billion. It’s the fifth time since 2019 that Astellas has acquired an outside company, as Japan’s third-largest drugmaker looks to solidify its treatment pipeline as it faces expired patent protection.