The New York Stock Exchange said on Tuesday it would suspend trading in shares of First Republic Bank effective immediately, a day after the lender was acquired by JP Morgan Chase.
The acquisition of First Republic came after its assets were seized on Monday by the California Department of Financial Protection and Innovation when efforts to rescue the lender failed. JP Morgan Chase agreed to acquire all of First Republic's deposits and all of its assets after the regulator appointed the Federal Deposit Insurance Corporation as receiver.
First Republic Bank's eight types of preferred stocks, including its common stock, will be delisted, according to a statement from the NYSE.
Trading in the company’s securities will be "suspended immediately", the exchange said.
"The NYSE will apply to the Securities and Exchange Commission to delist the company’s securities upon completion of all applicable procedures, including any appeal by the company of the NYSE regulation staff’s decision," it said.
The First Republic acquisition comes after financial turmoil engulfed mid-size regional banks in the US and led to the collapse of Silicon Valley Bank and Signature Bank in March.
As of April 13, San Francisco-based First Republic Bank had about $229.1 billion in assets and $103.9 billion in deposits. According to the order of possession, the bank had $14.9 billion in available cash on hand as of close of business on April 28.
JP Morgan led a group of 11 banks including Bank of America, Citigroup and Wells Fargo that extended a $30 billion lifeline to First Republic in March, but the move failed to quell investor concerns.
Last week, First Republic said it was taking steps to shore up its balance sheet and cut its workforce after deposits fell to about $104.5 billion in the first quarter of this year, from $176 billion in the fourth quarter of 2022.
Without the cash provided by America’s largest banks, First Republic’s decline in deposits would have been about $102 billion during the March banking crisis.
On Monday, the International Monetary Fund managing director Kristalina Georgieva said she expected more weaknesses to be exposed in the banking sector.
Addressing the banking crisis that has been unnerving investors for weeks, Ms Georgieva said the quick transition from low to much higher interest rates played a role in uncovering weaknesses at certain banks and that the pain may not be over.
Meanwhile, following the acquisition, First Republic Bank’s 84 offices in eight US states reopened as branches of JP Morgan on Monday during normal business hours.
All depositors of First Republic Bank are now depositors of JP Morgan and will have full access to all of their deposits.
Deposits will continue to be insured by the FDIC and customers do not need to change their banking relationship in order to retain their deposit insurance cover up to applicable limits.
The FDIC insures deposits up to $250,000 per each individual account and institution.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Profile
Co-founders of the company: Vilhelm Hedberg and Ravi Bhusari
Launch year: In 2016 ekar launched and signed an agreement with Etihad Airways in Abu Dhabi. In January 2017 ekar launched in Dubai in a partnership with the RTA.
Number of employees: Over 50
Financing stage: Series B currently being finalised
Investors: Series A - Audacia Capital
Sector of operation: Transport
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