30% on Wall Street. At the head of this noble cause has been the president of JP Morgan, Jamie Dimon, who, as reported by media such as Bloomberg and The Wall Street Journal, is leading the negotiations, together with the US authorities and regulators, for a second attempt to revive the besieged entity in the markets. Which, at the same time, is an implicit recognition that the joint injection of 30,000 million dollars into the bank has not been very helpful. On the table, all the scenarios are contemplated. Among them, that of a new injection of capital and that of the sale of the entity to a third party.
As reported by Bloomberg and The Wall Street Journal, about 70 billion dollars worth of deposits have already flown from the First, about 40%, since the Silicon Valley Bank (SVB) and Signature Bank collapsed at the beginning of the month. . All of this has forced Dimon to take the helm and lead a response from the financial industry in line with the historic role played by the banking giant in 2008 when Bear Stearns and Washington Mutal Inc. fell. Or already in the Panic of 1907 when J. Pierpont Morgan himself and other bankers helped ward off further spread of a banking crisis.
This means that the 30,000 million dollars injected in the form of deposits entered a week ago by 11 large US banks have not worked and the First Republic Bank has not managed to restore the confidence of investors. Several options are on the table in view of recent experience. It is considered, for example, converting part or all of those 30,000 million into a direct injection of capital.
The problem is that, once again, we are in a race without a clock in which the First bleeds to death on the Stock Market while the pressure continues to rise. Its shares have already lost more than 80% of their value so far this month. In this context, other options are also being considered beyond a surgical injection of capital: the sale of the entity to a third party, according to a source familiar with the conversations.
In any case, the First continues with a significant hole in its balance that the recent aid has not been able to fill. A bank spokesman said yesterday that “First Republic Bank is well positioned to manage short-term deposit activity.”
