Shares in First Republic Bank regained ground early Tuesday after it was announced that JPMorgan Chase CEO Jamie Dimon was holding talks to stabilize the ailing regional bank.
First Republic shares were up 16% at $14.13 before the open but are still down nearly 90% in March.
Other regional banks also posted gains, with New York Community Bancorp (NYCB) up 6% and Western Alliance (WAL) and PacWest Bancorp (PACW) both up about 4% in premarket trading.
Treasury Secretary Janet Yellen is expected to say the situation is stabilizing at a banking conference on Tuesday. She is also expected to say that the government could step in to protect depositors at other banks — as it has done at Silicon Valley Bank and Signature Bank — if regulators see the risk of a run on the banking system, Wall Street reported Journal citing their prepared remarks.
As the turmoil in the broader banking sector appeared to be abating on Monday, helped in part by UBS’s (Ticker: UBS) agreement to buy long-time rival Credit Suisse (CS), things only seemed to get worse for First Republic (FRC).
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The stock plunged 47% on Monday to close at an all-time low of $12.18. Month-to-date, shares are down more than 90% since Monday’s close.
The sharp drop came despite fresh talks to support the bank. The talks include a potential investment by JPMorgan and other banks, which had already injected $30 billion into First Republic, according to The Wall Street Journal.
These deposits could be turned into an investment. A sale of the bank or a capital injection are also options, the paper reported, citing people familiar with the matter.
A consortium of 11 US banks including Bank of America (BAC), Citigroup
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(C) and JPMorgan pledged Friday to inject $30 billion into First Republic for at least 120 days. Designed to boost confidence, it didn’t work as the stock fell 33% on Friday.
The latest development and the prospect of another rescue attempt did not reassure investors at first, but could still have a stabilizing effect.
Write to Callum Keown at [email protected]