First Republic Bank slid to an all-time low after S&P Global lowered the lender’s credit rating for the second time in a week and the Wall Street Journal reported that executives from major banks were discussing fresh stabilization efforts.
(Bloomberg) — First Republic Bank slid to an all-time low after S&P Global lowered the lender’s credit rating for the second time in a week and the Wall Street Journal reported that executives from major banks were discussing fresh stabilization efforts.
The discussions, led by JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon with the heads of other big banks, included possibly converting some or all of the $30 billion they deposited last week with First Republic into a capital infusion, the WSJ reported, citing people familiar with the matter.
Shares plunged as much as 50% before paring the drop to about 33% around 1:35 p.m. New York time, leaving them at around $15. Options traders bought up more than 45,000 contracts of $5 puts that expire Friday, which would profit from a deeper slump this week. The stock has already lost 87% this year.
Read more: Options Traders Pile Into First Republic Puts as Rout Continues
Earlier, S&P said First Republic’s $30 billion deposit from some of Wall Street’s biggest lenders may not solve the “substantial” challenges the bank is now likely facing, even if it does ease near-term pressure on liquidity.
First Republic bucked a broader rally in regional banks that was led by New York Community Bancorp.’s record 35% gain. NYCB surged after being upgraded by at least two analysts following its agreement to take over Signature Bank’s deposits and some of its loans.
Read more: New York Community’s Record Jump Leads Regional Banks Higher
(Updates shares, adds options trading)
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