Apollo CEO on JPMorgan’s First Republic deal: ‘The strong get stronger’

Titans in the financial services industry weighed in on JPMorgan’s (JPM) splashy deal for stricken regional bank First Republic (FRC) on Monday.

“The strong get stronger,” Apollo Global Management co-founder and CEO Marc Rowan said on Yahoo Finance Live (video above) at the 2023 Milken Institute Global Conference. “JPMorgan has run a conservative balance sheet. They run a fortress balance sheet. In times of stress, they benefit. It’s no more complicated than that.” (Disclosure: Apollo Global Management is the parent company of Yahoo Finance.)

Regulators seized First Republic early on Monday and sold a majority of the bank’s operations to JPMorgan. It marks the largest bank failure since the 2008 financial crisis, Yahoo Finance’s David Hollerith reported.

Dimon didn’t rule out more consolidation in the regional banking sector. Apollo’s Rowan said it’s a possibility too.

“To me, the interesting question is what is the future of regional banking going forward when $42 billion in deposits can leave in four hours?” Rowan said, questioning whether bank deposits are really stable and if banks can withstand a higher cost of credit.

“So when the dust settles,” Rowan added, “I think there will be a real shakeout as to what the business is of regional banking going forward.”

For JPMorgan, the crisis purchase is nothing new: The bank scooped up Washington Mutual and Bear Stearns at the height of the Great Financial Crisis more than a decade ago.

JPMorgan agreed to assume $173 billion in assets, $30 billion in securities, and all of First Republic’s $92 billion in deposits.

The Federal Deposit Insurance Corporation (FDIC) sweetened the deal by agreeing to share losses on certain residential and commercial loans, giving JPMorgan some protection if the assets go bad.

“This part of the crisis is over,” JPMorgan CEO Jamie Dimon told analysts on a conference call, adding that people should take a “deep breath.”

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Yahoo Finance’s David Hollerith contributed to this story.

Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations or anything else? Email [email protected]

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