JPMorgan Chase will buy First Republic Bank assets after an FDIC takeover. U.S. stock futures were flat heading into a week highlighted by the April jobs report and a Federal Reserve decision on interest rate hikes. Here’s what investors need to know today.
1. FDIC Seizes First Republic, Sells Assets to JPMorgan Chase
The Federal Deposit Insurance Corp. took control of First Republic Bank and agreed to sell most of its assets to JPMorgan Chase, in the second-largest bank failure in U.S. 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 March collapse of Silicon Valley Bank. After collecting bids for the bank over the weekend, regulators hope the deal will stem further turmoil in the banking sector.
2. Munger Sees Risks in Commercial Property Market
Investor Charlie Munger said that the commercial property market presents a serious risk for U.S. banks, which are loaded with “bad loans” that will become liabilities as property values drop. Munger, an investment partner of Warren Buffet at Berkshire Hathaway, said the risks aren’t as serious as the 2008 financial crisis, but they have helped prevent the investment firm from taking a more active role in the current banking turmoil.
3. Economic Worries Push Oil Prices Lower Despite OPEC+ Cuts
Worries about a Federal Reserve hike in interest rates and weak Chinese manufacturing data are helping push oil prices lower heading into the week. WTI crude oil was trading nearly 2% lower at just above $75 a barrel after economic conditions are undercutting the recent surprise announcement by OPEC+ to cut oil production in an effort to help keep prices elevated in advance of a potential loss of oil demand from an economic slowdown.
4. Financiers Behind Subway Sale Offer $5 Billion Debt Plan to Encourage Bids
JPMorgan Chase, which is managing 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 of more than $10 billion. Higher interest rates have made the sale more challenging, as debt has become more expensive, but bankers at JPMorgan Chase are hoping the debt financing plan will encourage firms to submit higher bids for Subway.
5. Japan’s Astellas Pharma Makes Deal to Buy US-Based Iveric Bio
Japan's Astellas Pharma agreed to buy New Jersey-based drugmaker Iveric Bio for about $5.9 billion. It’s the fifth time since 2019 that Astellas has acquired an overseas company, as Japan’s third-largest drug maker looks to solidify its pipeline of treatments as it faces expiring patent protections.