JPMorgan Chase has acquired all deposits, assets and certain liabilities of Washington Mutual’s banking operations. Logo courtesy of JPMorgan Chase.

JPMorgan Chase has acquired all deposits, assets and certain liabilities of Washington Mutual’s (WaMu) banking operations from the Federal Deposit Insurance Corporation (FDIC).

The acquisition is expected to be immediately accretive to earnings and to add more than 50 cents per share in 2009. It expands Chase’s consumer branch network into California, Florida and Washington State and creates the nation’s second-largest branch network – with locations reaching 42% of the US population.

Excluded from the transaction are the senior unsecured debt, subordinated debt, and preferred stock of WaMu’s banks. JPMorgan Chase will not be acquiring any assets or liabilities of the banks’ parent holding company (WM) or the holding company’s non-bank subsidiaries. As part of this transaction, the bank will make a payment of approximately $1.9 billion (£1.07bn) to the FDIC.

“This deal makes excellent strategic sense for our company and our shareholders. Our people have worked hard to build a strong franchise and balance sheet – making this compelling transaction possible,” said Jamie Dimon, Chairman and CEO.

The WaMu deal is the latest move by JPMorgan Chase to profit from the global financial crisis, after buying Bear Sterns, the investment bank, in March.

WaMu’s collapse was triggered by considerable withdrawals during recent days, with customers starting to leave on 15 September, the day Lehman Brothers collapsed. Over the next 10 days, they withdrew $16.7bn in deposits.

JPMorgan Chase raised $10bn in a share sale just hours after the acquisition, called to offset $8bn of credit provisions, writedowns and losses, and to cushion the blow of buying WaMu. With an oversubscribed sale, the bank in fact managed to make $2bn more than planned.

WaMu turned down JP Morgan in March in favour of a $7bn cash injection from a consortium led by private equity firm TPG – who will now lose $1.35bn in the WaMu collapse.

JPMorgan Chase will now boast 5,400 branches in 23 states, serving as an excellent base to extend the reach of the business banking, commercial banking, credit card, consumer lending and wealth management businesses. The acquisition also extends Chase’s retail branch network to additional states, including Georgia, Idaho, Nevada and Oregon. 

“We look forward to welcoming Washington Mutual’s employees to JPMorgan Chase and working with them as we build a great company together,” Dimon added.