JPMorgan to purchase nearly $2 billion of mortgages in PacWest deal – source.

JPMorgan to purchase nearly $2 billion of mortgages in PacWest deal - source.

JPMorgan Chase to Facilitate Banc of California’s Purchase of PacWest Bancorp

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In an unexpected move, JPMorgan Chase & Co has agreed to buy almost $2 billion worth of mortgages to facilitate Banc of California’s purchase of PacWest Bancorp. The investment bank will acquire $1.8 billion of single-family residential loans at a discount, according to a source with knowledge of the matter.

Banc of California and PacWest recently announced an all-stock merger, with the addition of a $400 million equity raise from Warburg Pincus and Centerbridge Partners. This strategic move aims to create a bank with $36 billion in assets. It is worth noting that Banc of California had secured a “contingent forward asset sale agreement” for its residential mortgage portfolio, without disclosing the identity of the buyer.

This merger stands out as a rare transaction in the market, considering the recent trend of government-negotiated sales of failed banks. Many bank mergers have also been delayed or abandoned due to prolonged regulatory approval processes. However, the completion of this merger is expected by late 2023 or early 2024, along with the simultaneous closing of the mortgage transaction.

PacWest encountered significant challenges earlier this year when three regional banks collapsed, causing a major industry turmoil reminiscent of the 2008 financial crisis. The decision to purchase the mortgages demonstrates a strategic move by JPMorgan Chase to support PacWest during this challenging period.

The news of JPMorgan Chase’s mortgage purchase to facilitate Banc of California’s acquisition of PacWest has caught the attention of industry experts and the media. Bloomberg News was the first to report this significant development, further highlighting the market’s interest in this transaction.

In conclusion, JPMorgan Chase’s decision to acquire $1.8 billion worth of mortgages to support the merger between Banc of California and PacWest Bancorp is a bold move that demonstrates the bank’s commitment to the industry and its clients. This transaction not only provides financial assistance but also instills confidence in the market, signalling the potential for growth and stability in the sector.

Sources: – Reuters: JP Morgan to Buy Mortgages – Bloomberg News: JPMorgan to Facilitate California Bank’s Purchase