Deal could accelerate wealth management strategy
At JPMorgan Chase & Co.'s 2022 investor day, the bank’s chief executive officer Jamie Dimon told the crowd to "watch out" for its wealth-management division. Gaining a larger proportion of high-net-worth clientele is “one of our greatest opportunities”, he added.
These plans for wealth management growth are likely to be greatly accelerated by JPMorgan's acquisition of First Republic Bank. However, Dimon stated that the largest U.S. bank does not intend to retain the name First Republic.
The purchase of First Republic Bank by JPMorgan is expected to accelerate its aspirations for wealth management expansion. With wealth-management assets that soared to $289.5 billion as of March 31 compared to $107 billion in 2017, First Republic was a powerhouse to be dealt with in Wall Street's quest for ultra-wealthy clients before the regional banking crisis.
But since then, several advisor teams have left, leaving the future of the company uncertain. The most recent advisors to quit First Republic were Brian Addington and Theresa Allen, who left in the middle of a crisis brought on by Silicon Valley Bank's failure. Combined, they have a $555 million in AUM.
In a presentation to investors on Monday, JPMorgan, which maintains an asset- and wealth-management platform with over $4.3 trillion in client assets, claimed that the deal will expand the bank's access to high-net-worth clients in what it considers to be desirable regions.
In addition to having 32 locations in San Francisco, First Republic also has 13 in New York and 10 in Los Angeles.
“While there will definitely be some distractions throughout the integration process and it’s pretty hard to know if most clients and advisors stick around, we do think the franchise is very complementary to JPM Chase and also accelerates [its] U.S. wealth strategy,” Evercore ISI analysts led by Glenn Schorr wrote.
JPMorgan Advisors, which JPMorgan acquired from Bear Stearns in 2008, will now include First Republic's private wealth-management platform. It is a component of the bank's wider U.S. wealth management division, which was established under its consumer business.
As Big Wall Street banks concentrated their attention on the northern part of the state to court the area's wealthy entrepreneurs and tech millionaires, First Republic's extensive presence in California may have been most appealing.
“The deal accelerates U.S. wealth growth plans by adding branches in affluent markets,” Bloomberg Intelligence analysts Alison Williams and Neil Sipes wrote in a report Monday.
