JPMorgan Chase & Co will buy almost $2 billion worth of mortgages to facilitate Banc of California’s purchase of PacWest Bancorp, a source with knowledge of the matter told Reuters.
The investment bank has entered into an agreement to buy $1.8 billion of single-family residential loans at a discount, the source said.
Banc of California and PacWest on Tuesday announced an all-stock merger with a $400 million equity raise from Warburg Pincus and Centerbridge Partners to create a bank with $36 billion in assets.
Banc of California had entered into a “contingent forward asset sale agreement” for its residential mortgage portfolio, the lender said in a presentation on Tuesday, without naming the buyer.
The merger marks a rare transaction in the market after several months of government-negotiated sales of failed banks. Bank mergers have also been held up for months or scrapped awaiting regulatory approval.
The merger is expected to be completed by late 2023 or early 2024. The source said the mortgage transaction will also close at the same time.
PacWest was among the lenders that were rocked by the collapse of three regional banks earlier this year, prompting the worst industry turmoil since the 2008 financial crisis.
The mortgage purchase was earlier reported by Bloomberg News.
Source: Reuters.com