International Monetary Fund managing director Kristalina Georgieva said on Monday she expects more weaknesses to be exposed in the banking sector, only hours after <a href="https://www.thenationalnews.com/business/banking/2023/05/01/first-republic-seized-by-regulators-as-bid-accepted-from-jp-morgan/" target="_blank">First Republic Bank</a> was acquired by JPMorgan Chase. Speaking at the 2023 Milken Institute Global Conference in Beverly Hills, California, Ms Georgieva immediately addressed the biggest topic of the day; the banking crisis that has been unnerving investors for weeks. She said the quick transition from low to much higher interest rates played a role in uncovering weaknesses at certain banks and added that the pain may not be over. "It doesn't mean that we have a free pass," she said. "It doesn't mean that there wouldn't be more vulnerabilities to come." Investors have said on the sidelines of the conference that they are worried more drama could lie ahead as investors could target other smaller vulnerable banks. Ms Georgieva said what was noteworthy in the latest rescue was how quickly deposits moved away from San Francisco-based First Republic and said the speed was partly due to the power of social media. However, she also praised regulators and said she expects to see "new regulatory and disclosure thinking around how we deal with this". Earlier on Monday, the California Department of Financial Protection and Innovation seized First Republic Bank, with JPMorgan Chase set to take over the failed lender after efforts to rescue it failed. The DFPI appointed the Federal Deposit Insurance Corporation as receiver and accepted JP Morgan's bid to assume all deposits and purchase the assets of First Republic Bank, according to a statement. Investors are keenly awaiting the conclusion of the Fed's two-day policy meeting on Wednesday for signs that its aggressive monetary policy tightening is coming to an end soon. Recent economic data has reinforced bets of another 25-basis point interest rate hike, with investors pricing in 90 per cent chances of such a move, according to CME Group's FedWatch tool. Investors will also focus on Fed chairman Jerome Powell's press conference to assess if the reserve's commentary pushes back market expectations of rate cuts before the year-end amid the recent banking turmoil and threats of an imminent recession. The IMF last month warned that the turmoil in the banking system will likely be a drag on economic growth, and that financial markets remained fragile and stressed. It lowered its growth outlook to 2.8 per cent for this year, and warned of further downside risks as stresses in the financial sector adds to pressures from tighter monetary policy and Russia’s invasion of <a href="https://www.thenationalnews.com/tags/ukraine" target="_blank">Ukraine</a>. <i>Agencies contributed to this report</i>