US-based First Republic Bank was closed on Monday (local time) by the local regulators and entered into an agreement with JP Morgan Chase Bank to purchase and assume all deposits and assets of the troubled bank in a bid to protect depositors. Manoranjan Sharma, Chief Economist, Infomerics Ratings commented on the acquisition and said, “This is the fourth bank which has been seized by the regulators. There was some kind of mismatch between the assets and liabilities. The major issue according to me is the interest rate risk. The interest rate has been consistently rising but the focus of the banks over the few years has mainly been on the issues such as credit, market and operational risk.” When asked about the impact of the incident on other American banks, he said, “This has a significant impact on the other banks. The incident has spoiled the environment for the banking and financial sector. He also said that the incident will not affect any Indian banks as they are quite robust, well capitalized, and well regulated and there does not appear any reason for the Indian banks to be concerned about it.”