The group of US banks that came to First Republic’s help last week were considering converting some or all of their $45b in deposits into a capital infusion.
P Global lowered the lender’s credit rating for the second time in a week and thereported that executives from major banks were discussing fresh stabilisation efforts.
The discussions, led by JPMorgan Chase chief executive officer Jamie Dimon with the heads of other big banks, included possibly converting some or all ofFirst Republic Bank not out of the woods yet.Shares plunged as much as 50 per cent before paring the drop to about 40 per cent around 2.45pm New York time, leaving them at around $US14. Options traders bought up more than 45,000 contracts of $US5 puts that expire Friday, which would profit from a deeper slump this week.
“We do not view this deposit infusion--which has an initial maturity of 120 days--as a longer-term solution to the bank’s funding issues. In addition, we think attracting meaningful deposits will be difficult, constraining the bank’s business position.”P lowered its long-term issuer credit rating on First Republic to ‘B+’ from ‘BB+’.
First Republic bucked a broader rally in regional banks that was led by New York Community Bancorp’s record 35 per cent 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.
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