Dimon seeks bailout of First Republic as shares tumble
JP Morgan boss Jamie Dimon was last night spearheading efforts to craft a rescue deal for troubled US regional lender First Republic.
As shares in First Republic tanked again, the Wall Street veteran held talks with the chief executives of other major banks about how to shore up its battered finances.
JP Morgan was one of 11 US banks to deposit a total of £25bn into First Republic at the end of last week in a bid to restore confidence.
But it failed to have the desired effect and First Republic shares fell another 45.7pc yesterday – taking losses this month to 90pc – as customers pulled tens of billions of dollars from their accounts.
Dimon is leading talks focused on how to boost the bank’s cash reserves. The plan could involve converting some or all of the £25bn deposited by the 11 banks last week into a capital injection.
Customers at San Francisco-based First Republic have pulled out around £57bn in deposits as it became caught up in the panic sparked by the collapse of Silicon Valley Bank (SVB) earlier this month.
The scramble to rescue First Republic comes as Dimon and other banking executives work with US regulators to restore confidence to the financial system as it faces its worst crisis in 15 years. Three US banks – SVB, Signature Bank and Silvergate – have collapsed this month. Over the weekend, New York Community Bank agreed to buy more of Signature.
‘In less than a fortnight, three mid-sized US banks have failed and Credit Suisse has been fast-tracked into a takeover by UBS,’ said Ian Stewart, Deloitte’s chief economist in the UK. ‘These events represent the most challenging moment for the banking system since the early days of the financial crisis in 2008.
‘As has happened so often before, a combination of rising interest rates and slowing growth are testing the financial system.’