First Republic Rescue Proposal Would Convert Deposits to Capital

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon has hatched a new plan to aid First Republic Bank that would convert some or all of the $30 billion in deposits that a group US banks injected into a capital infusion for the struggling California lender, according to people familiar with the situation.

(Bloomberg) — JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon has hatched a new plan to aid First Republic Bank that would convert some or all of the $30 billion in deposits that a group US banks injected into a capital infusion for the struggling California lender, according to people familiar with the situation.

First Republic is looking for ways to bolster its finances after depositors were shaken by the failure of Silicon Valley Bank, according to the people, who asked not to be identified because the talks are private. 

Eleven banks have agreed to replenish deposits that fled First Republic amid turmoil at US regional banks. The discussions are at an early stage and it’s possible members of the bank group will decide against any conversion.

A representative for JPMorgan declined to comment, and First Republic declined to comment on the potential swap. “Following Thursday’s uninsured deposit of $30 billion by the 11 largest banks in the country, together with cash on hand, First Republic Bank is well-positioned to manage short-term deposit activity,” the bank said in a statement.  

The Wall Street Journal reported earlier on the possible exchange. The shares, which had fallen almost 50% during the day, retraced some of the lost ground and were down 26% as of 1:25 p.m. in New York. 

–With assistance from Hannah Levitt and Jenny Surane.

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