July 23, 2024
JPMorgan CEO Jamie Dimon working to raise more support for First Republic: WSJ

JPMorgan CEO Jamie Dimon working to raise more support for First Republic: WSJ

First Republic Bank fell to an all-time low Monday as questions about its balance sheet and financial health sharply knocked down the stock, even as reports surfaced of prospects for fresh capital.

JPMorgan Chase & Co. JPM, +1.06% Chief Executive Jamie Dimon is working to raise additional capital for First Republic, the Wall Street Journal reported Monday.

Dimon is reportedly leading banks in a new campaign to shore up First Republic after last week he helped lead a $30 billion placement in deposits with First Republic from 11 banks.

On Monday, First Republic stock FRC, -47.11% fell 47% and closed at an all-time low of $12.18 a share. Trading was halted during the day for volatility. The stock is now down about 91% in the past month.

Janney Montgomery Scott analyst Tim Coffey said First Republic stock is falling so sharply partly because investors don’t know what a potential second capital raise will look like, or how the bank’s balance sheet is faring after a steep run in deposits. Another unknown is the company’s Tier One leverage ratio, which is the amount of capital it keeps on hand for riskier investments.

“We don’t know where they are now,” Coffey said. “We don’t know what current deposit balances are or where they’re at with their Tier 1 ratio, or where their balance sheet is. That’s why there’s so much concern.”

Discussions are underway to find ways to convert $30 billion in deposits from 11 banks last week into a capital raise, said the Journal report, which cited people familiar with the situation.

Over the weekend, S&P downgraded First Republic’s debt to B+ in the debt-rating firm’s second cut to it in less than a week.

The Journal report on Monday said the banks may make an investment in First Republic as part of a capital injection. A spokesperson from JPMorgan declined to comment.

A First Republic spokesperson said the bank remains “well-positioned to manage short-term deposit activity,” according to an email to MarketWatch.

With exposure to wealthy clients in Silicon Valley, First Republic has been swept up in concerns about further bank failures after the collapse of Silicon Valley Bank, Signature Bank and Silvergate Bank in the past couple of weeks.

The bank has been booking billions of dollars in lost deposits, but said the flight had slowed by late last week.

First Republic also carries a large percentage of uninsured deposits, which are more vulnerable to being withdrawn at short notice.

Also read: First Republic falls to record low but U.S. bank stocks rise on FDIC moves and hopes of a pause in interest rates


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