Jamie Dimon, CEO at $JPMorgan (JPM.US)$, is leading talks with other leaders of prominent banks to resolve the $First Republic Bank (FRC.US)$ crisis, the Wall Street Journal reported on Monday.
Last week, 11 of America's major banks gathered $30 billion to provide a deposit infusion at First Republic, with Chase putting $5 billion alongside $Bank of America (BAC.US)$, $Citigroup (C.US)$ and $Wells Fargo & Co (WFC.US)$.
A bank official said on Sunday that First Republic Bank is well-positioned to handle short-term deposit outflows. Since the start of Silicon Valley Bank crisis, deposit withdrawals from First Republic have exceeded $70 billion, according to the WSJ.
The Latest On First Republic: On Monday, the Wall Street Journal said sources familiar with the matter raised the possibility of transforming some or all of the $30 billion in deposits into a capital injection.
The major banks are making every effort to avert system-wide confidence crises as a result of bank collapses. It looks like a rerun of the months leading up to the 2008 collapse of Lehman Brothers, when JPMorgan and Dimon purchased Bearn Stern following its bankruptcy.
Yet many investors remain skeptical that the measure would be adequate to bolster trust in smaller troubled banks.
On Monday, trading in First Republic shares was briefly halted, before the stock continued to fall up to 47%, hitting fresh all-time lows.
First Republic Downgraded Further To Junk: $S&P Global (SPGI.US)$ lowered FRC's credit rating on Sunday from BB+ to B+, deep into junk territory, and issued a warning that more downgrades are probable due to "high liquidity stress with substantial outflows."
The report said that although the influx of deposits may alleviate near-term liquidity difficulties, it "may not solve the substantial business, liquidity, funding, and profitability challenges" the bank is likely to face.