Banking Crisis: JPMorgan CEO Leads Talks to Stabilize Troubled First Republic Bank”

JPMorgan Chase CEO Jamie Dimon is leading talks with the chief executives of other big banks about fresh efforts to stabilize troubled First Republic Bank. The discussions, while preliminary, have focused on how the industry could arrange for an investment that would boost the bank’s capital, according to people familiar with the matter. Among the options on the table is an investment in First Republic by the banks themselves.

Eleven big banks banded together last week to deposit $30 billion in First Republic in an effort to restore confidence in the lender. The San Francisco-based bank’s customers have withdrawn some $70 billion since the collapse of Silicon Valley Bank earlier this month.

The situation is fluid and fast-moving. First Republic is facing intense pressure to reassure investors that it is viable. Its stock has lost more than 90% in March. Shares closed down 47% at $12.18 on Monday, after the Journal first reported on the talks. It was the stock’s lowest closing price on record.

A sale or outside capital injection are also among the options on the table, people familiar with the matter said. JPMorgan’s investment bankers were hired to advise First Republic on its various options, one of the people said.

Mr. Dimon and his fellow CEOs are trying to instill confidence in a banking system facing its worst crisis in 15 years. In tandem with federal regulators, Mr. Dimon led last week’s effort to shore up First Republic, according to people familiar with the matter.

The rapid collapse of Silicon Valley Bank, a bank that catered to startups and their investors, has investors and customers worried about other regional banks that have a similar profile. Like SVB, First Republic’s large share of uninsured deposits makes it susceptible to a run.

Two days after SVB’s collapse, the Federal Deposit Insurance Corp. said it had taken over Signature Bank, which had also had a run on deposits.

Then, a sharp decline in Credit Suisse Group AG shares last week culminated in a hasty merger with crosstown rival UBS Group AG on Sunday.

The banking turmoil has jolted financial markets. But on Monday, some U.S. regional banks led the stock market higher. New York Community Bancorp shares soared 32% after the bank agreed to buy much of Signature Bank’s loans and deposits.

PacWest Bancorp climbed about 11%, U.S. Bancorp rose nearly 5% and Comerica Inc. was up nearly 2%. The S&P 500 rose 0.9%, while the Dow Jones Industrial Average gained 1.2%. The tech-heavy Nasdaq Composite rose 0.4%.

Still, Monday’s gains weren’t big enough to return those banks to where they were trading before the Silicon Valley Bank meltdown. PacWest shares remain nearly 62% below their closing price on March 8. U.S. Bancorp and Comerica shares are still down about 24% and 34%, respectively.

For investors, the episode laid bare the differences between smaller, specialized lenders, and the biggest U.S. banks, which became tightly regulated and highly diversified after nearly collapsing during the last financial crisis.

The big banks’ strength has left them in a position to aid smaller competitors like First Republic.

Mr. Dimon and JPMorgan, the largest U.S. bank by assets, have a long history of stepping into the breach during crises. JPMorgan bought Bear Stearns after it failed in 2008, then took on Washington Mutual Inc.’s operations.

Mr. Dimon parlayed his crisis management into a statesman role among the bank executives. He is the longest-serving CEO of the bunch, in the role since 2005, and regularly uses his perch to advise government officials and promote policy moves he says will.