Karachi: JPMorgan Chase and Co (JPM.N), biggest US bank by assets said it will buy most of First Republic Bank's (FRC.N) assets after US regulators seized troubled bank. Collapse marks third major US lender to fail in less than two months, after week of panic which saw First Republic lose 75 percent of its market value as its future turned murkier. Jameel Ahmed Chief analyst at Comparebroker.IO said,

"Confidence in banking sector now weakened further, which means that investors should expect financial markets to remain on defensive."

"Assets such as dollar and Japanese yen will be on radar as traders look for an asset of safety. Gold prices in particular have been on gradual incline for much of 2023 so far and such worrying indications of more stress in banking sector can be viewed as potential catalyst to add needed fuel to rally that has run out of fumes in recent weeks."

"As controversial as it will be, bitcoin price reaction should also be watched if this confidence crisis leads traders to seek an unconventional asset."

"For JPM, we believe purchase is modestly accretive to EPS and tangible book value has manageable risk and can be additive to its wealth management franchise." "This marks second largest failure on record. Still, unlike Silicon Valley Bank and Signature Bank, FDIC had buyer waiting in wings. FDIC noted it was highly competitive bidding process."

1. Scott Siefers MD and Frank Williams research analyst at Piper Sandler was of opinion, "Deal includes modest financial benefits, but to us, it is more significant for reputational benefits insofar as it further solidifies JPM as go-to industry leader in times of turmoil." "Only worry we have is at-present unknowable. JPM was already hugely significant player that has now managed to make itself even more so at time when 'too-big-to-fail' is still political concern."

Thomas Hayes Chairman Managng member at Great Hill Capital said, "When it was just SVB, it was easy to blame management. However, now that we see pattern it is evident that Fed has moved too far, too fast and is breaking things." "While the market has priced in another hike this week, we think developments over weekend will cause Federal Open Market Committee to be more prudent with their guidance and respect message of market."

Published in The Daily National Courier, May, 02 2023

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