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JPMorgan chief executive Jamie Dimon seeks to create a comprehensive rescue plan for First Republic amid the banking crisis.
Jamie Dimon is on top of efforts geared at a rescue plan to salvage the embattled commercial bank First Republic (NYSE: FRC). The JPMorgan (NYSE: JPM) CEO recently led a consortium of big banks that contributed $30 billion to prop up the failing San Francisco-based financial institution. Dimon also orchestrated the fiscal rescue plan alongside government representatives, including Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen.
However, fresh news states that Jamie Dimon is still looking to craft additional elements to the First Republic rescue plan. Dimon is now leading discussions with his counterparts from other leading banks, including Goldman Sachs (NYSE: GS) and Bank of America (NYSE: BAC). Other involved banks include Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), and Wells Fargo (NYSE: WFC).
Takeaways from Jamie Dimon-led First Republic Rescue Plan
Discussions among these banking executives reportedly center around stabilizing First Republic and boosting its capital. These palliative measures include multiple steps, including having leading banks invest in the troubled First Republic. Inside sources allege that the investment plan could directly use some of the deposited $30 billion as capital infusion. In addition, a sale of First Republic or external capital injection into the embattled bank is also up for consideration.
JPMorgan and its banking contemporaries must also move fast with their agenda to salvage First Republic. The San Francisco-based bank already faces intense pressure to reassure investors of its viability. As it stands, First Republic’s customers have withdrawn roughly $70 billion from the bank since Silicon Valley Bank’s (SVB) collapse. SVB had declared bankruptcy earlier this month, throwing the financial system into a tailspin.
First Republic’s shares have crashed by over 90% this month and closed down 47% at $12.18 yesterday. This unsavory development represented its stock’s lowest closing price on record. First Republic’s shares also took a beating last Friday following news of the JPMorgan-led rescue deal. However, the troubled bank later pared some of those losses.
First Republic Rescue Plan Reflects Banking Sector Commitment to Enhance Operability
The rescue efforts by the big banks towards First Republic were unprecedented at the time of its announcement and reflected solidarity. In a joint statement underscoring their commitment to assisting First Republic, the banking group said:
“This action by America’s largest banks reflects their confidence in First Republic and in banks of all sizes, and it demonstrates their overall commitment to helping banks serve their customers and communities.”
US government fiscal parastatals also commended the rescue initiative in a joint statement. According to The Federal Reserve, Office of the Comptroller of the Currency, Treasury Department, and Federal Deposit Insurance Corporation:
“This show of support by a group of large banks is most welcome and demonstrates the resilience of the banking system.”
First Republic is the latest focal point amid pervading fears of a midsize US banking crisis. This financial turmoil is also prevalent in Europe, with the recent emergency rescue of Credit Suisse by fellow Swiss rival UBS.