Dimon, banker against crises. The three rescues signed JpMorgan- Corriere.it

Our government has called on us and others to step in and we have, said Jamie Dimon, chairman and CEO of JP Morgan Chase, explaining the takeover of First Republic Bank, after a weekend flash auction organized by the FDIC. the Federal Deposit Insurance Agency, with the help of the US Treasury. It is the third crash in less than two months on the US credit market, after Svb and Signature Bank. With $10.6 billion on the table, Dimon closed the deal at 3.20am on Monday, ahead of Wall Street’s reopening, beating competition from Pnc and Citizen, the other two lenders remaining in the running after the withdrawal. of Bank of America and Us Bancorp, which had participated in the first round.

It is a move that strengthens Jp Morgan’s primacy as the first bank on the US market (it had $2.38 trillion in deposits and $3.7 trillion in assets at the end of the first quarter of this year). But at the same time he supports Dimon’s role of savior-against-crisis banker, won over a decade ago when JP Morgan saved Bear Stearns by buying itthe fifth US investment bank, in March 2008 and then when, a few months later, on September 25, 2008, 10 days after the bankruptcy of Lehman Brothers, it acquired the assets of Washington Mutual, which to this day remains the largest bank failure in American banking history. Washington mutual had 2,200 agencies, 43,000 employees, for approximately 307 billion in assets and 188 billion in total deposits. First Republic, the 20th US bankheadquartered in San Francisco, 86 branches and 7,200 employees, now it becomes the second, followed by Silicon Valley Bank in mid-March.

Although requested by the US authoritiesthe bailout by an institution that collects 14% of American deposits raises manyand critic, because on the one hand competition on the credit market decreases, on the other it increases the risks of an institution that is already too big to fail. In normal times, the takeover would not have been possible, because the law prohibits a bank from buying another when it exceeds the 105% deposit threshold. But these are no longer normal times. And the emergency allows exceptions to the rules.

In 2008, Dimon’s intervention not only saved all the deposits, but there was no cost to the Fdic. In the case of First Republic, JP Morgan will take over all remaining deposits, equal to 103.9 billion after the escape of 100 billion in the first quarter, especially after the collapse of the SVB in March, as well as assets of 229 billion. While the federal agency, which has agreed to absorb part of the losses on mortgages, as well as guaranteeing a loan to JpMorgan of 50 billion, estimates limiting the damages to 13 billion.

Jamie Dimon, 67, one of Wall Street’s longest-serving managers, has led Jp Morgan since 2005, after the 2008 crisis he learned that restoring stability to the banking system is imperative also for the good of JpMorgan. Not surprisingly, as an advisor, the Wall Street bank first became a customer, depositing 30 billion together with 11 other banks to strengthen the assets of the Californian institution, after the turmoil triggered by the crash of the SVB, and then a buyer. Saving First Republic, which has not been able to deal with the sudden increase in interest rates, is good for the country, but also for JpMorgan, which conquers the coveted deposits of its wealthy clients, to whom it will be able to offer profitable wealth management services. (First Republic will add $500 million a year to JPMorgan’s net income, which forecasts $2 billion in integration costs over the next 18 months).

The announcement that this banking crisis is over, made hot by Dimon, seems premature. Mid-sized bank stocks were in deep red on Wall Street yesterday: from PacWest (-25%), to Metropolitan Bank (-20) and Western Alliance (-19%). The big credit companies, including JPMorgan (-1.6%), also fell. The fear that the tightening of the rules announced by the Federal Reserve, after the mea culpa on the supervision of the Svb, will push the lenders to tighten up on loans, which together will raise interest rates by the Fed, which today could announce a new increase of the cost of money, will weigh on growth. At the close of the session, both the Dow Jones and the Nasdaq composite closed down 1.08%.

Even the European Stock Exchanges closed with a minus sign, also sunk by rising inflation data, which will push the European Central Bank not to give up on the ongoing monetary tightening (a new intervention from the ECB is expected on Thursday 4 May), by the worsening of the manufacturing index and by the sharp drop in oil prices, heralding a slowdown in global demand. Milan lost 1.65%; Paris 1.45%; Frankfurt 1.23%; and London -1.24%. Probably this crisis is not over yet.

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