Jamie Dimon Leading Efforts to Craft New First Republic Bank Rescue Plan

[bhaigan]

JPMorgan Chase JPM 0.60%increase; green up pointing triangle & Co. Chief Executive Jamie Dimon is leading discussions with the chief executives of other big banks about fresh efforts to stabilize troubled First Republic Bank FRC -31.52%decrease; red down pointing triangle.

The discussions, while preliminary, have focused on how the industry could arrange for an investment that would boost the bank’s capital, according to people familiar with the matter. Among the options on the table, the people said, is an investment in First Republic by the banks themselves.

Eleven big banks banded together last week to deposit $30 billion in First Republic in an effort to restore confidence in the lender. The San Francisco-based bank’s customers have withdrawn some $70 billion since the collapse of Silicon Valley Bank earlier this month, The Wall Street Journal previously reported.

The plan could involve the banks converting some or all of the $30 billion in deposits into a capital infusion, some of the people said.

The situation is fluid and fast-moving. First Republic is facing intense pressure to reassure investors that it is viable. Its stock has lost more than 80% in March. It fell another 17% Monday morning to below $20, touching a new all-time low.

A sale or outside capital injection are also among the options on the table, people familiar with the matter said.

Mr. Dimon and his fellow CEOs are trying to instill confidence in a banking system facing its worst crisis in 15 years. In tandem with federal regulators, Mr. Dimon led last week’s effort to shore up First Republic, according to people familiar with the matter.

 

Mr. Dimon and JPMorgan have a long history of stepping into the breach during crises. JPMorgan bought Bear Stearns after it failed in 2008, then took on Washington Mutual Inc.’s operations.

In the Panic of 1907, a semiretired J. Pierpont Morgan helped stave off a national financial crisis when he rallied his fellow bankers to shore up a number of lenders that had seen a run on their deposits.

The recent banking turmoil has taken a heavy toll on First Republic. Deposit outflows slowed Friday after the bank-led rescue, yet First Republic still has a big hole left to fill on its balance sheet.

“First Republic Bank is well-positioned to manage short-term deposit activity,” a bank spokesman said Sunday.

The rapid collapse of Silicon Valley Bank, a bank that catered to startups and their investors, has investors and customers worried about other regional banks that have a similar profile. Like SVB, First Republic’s large share of uninsured deposits makes it susceptible to a run.

[bhaigan]

with this I am guessing JPMorgan will buy FRC