Wall Street titan Jamie Dimon is leading talks to stabilize First Republic Bank — with discussions including a possible investment in the troubled regional lender by the nation’s biggest banks, according to a report.
Dimon — whose JPMorgan Chase and 10 other banks last week pooled $30 billion to help keep the struggling lender afloat — was leading discussions with fellow banking executives on Monday as First Republic’s stock price tanked by some 34% just after midday.
News of Dimon’s efforts was first reported by The Wall Street Journal, which said the new investment plan reportedly floated by Dimon entails converting some or all of the $30 billion of deposits into a capital infusion.
A sale of First Republic or outside capital injection “are also on the table,” the paper reported, citing sources close to the situation.
San Francisco-based First Republic — which reportedly has seen clients yank $70 billion since the start of a US banking crisis that has seen the collapse of Silicon Valley Bank and New York-based Signature Bank — saw its shares temporarily halted during Monday’s session on Wall Street.
JPMorgan — whose Dimon reportedly led last week’s effort to shore up First Republic — has a lengthy track record of stepping in to stave off US financial crises.
In 2008, JPMorgan bought Bear Stearns after it failed, then took on Washington Mutual.
First Republic declined to comment on the Journal report.
A spokesperson for First Republic pointed to an earlier statement where the bank said it was “well-positioned to manage short-term deposit activity.”
First Republic was left reeling on Monday after the Standard & Poor’s credit rating agency downgraded the bank to a B+ rating — citing “substantial” concerns about the lender’s financial health.
Analysts are keeping a close watch on First Republic, which could be the next domino to fall following the collapse of Silicon Valley Bank and Signature Bank.
Despite First Republic’s plight, other regional banks saw their share prices rise during Monday’s trading session.
Zions Bancorp was trading at around 2% higher as of 1 p.m. on Monday while PacWest was up more than 11%.
KeyCorp, the Cleveland-based lender, was trading at more than 2% higher.
The banking sector’s woes migrated across the Atlantic to Europe, where Swiss giant UBS acquired troubled lender Credit Suisse for the bargain price of $2.3 billion on Sunday.
Before the acquisition, Credit Suisse had teetered on the verge of collapse this week after bank officials warned of “material weaknesses” in its financial reporting over the last two years.