To The Moon

The biggest banks in the U.S., including JPMorgan Chase $JPMorgan(JPM.US)$ & Co., are discussing a joint rescue of First Republic Bank $First Republic Bank(FRC.US)$ that could include a sizable capital infusion to shore up the beleaguered lender, people familiar with the matter said.

JPMorgan is working with Citigroup Inc. $Citigroup(C.US)$, Bank of America Corp. and Wells Fargo & Co. to provide a lifeline to First Republic, the people said. Others involved include Morgan Stanley and Goldman Sachs Group Inc. as well as U.S. Bancorp and PNC Financial Services Group Inc. $PNC Financial Services(PNC.US)$, the people said.

The deal could be unveiled as early as today, the people said.

The situation is fluid and whether a deal comes together and what it might look like is still highly uncertain. Any deal would need the blessing of regulators and will be driven at least in part by the bank's highly volatile stock. First Republic's stock has been pummeled for days and fell another 31% Thursday morning over concerns about the bank's health in the wake of the collapse of Silicon Valley Bank.

Should there be a deal, it could come together in the coming days, the people said.

First Republic came under a spotlight after Silicon Valley Bank's collapse last week sparked concerns about other regional banks with large collections of uninsured deposits. Customers yanked billions of deposits out of First Republic and the bank over the weekend sought to stem the tide with a deal, announced Sunday, involving additional funding from the Federal Reserve and JPMorgan that gave the bank a total of $70 billion in available liquidity.

The bank has maintained it is stable and that deposit losses aren't overwhelming, people familiar with the matter have said.

But S&P Global Ratings on Wednesday downgraded the bank's bonds to junk status and investors continued selling, adding more uncertainty.

The bank's stock is down by roughly three-quarters this week. Its market capitalization has fallen from $21 billion on March 8, when the SVB crisis began, to less than $5 billion.

The fast-moving situation is reminiscent of the drama in the banking system in the 2008 financial crisis, when JPMorgan and its Chief Executive, Jamie Dimon, played the role of white knight, purchasing Bear Stearns and then Washington Mutual. Lawsuits, losses and political pressure followed. Mr. Dimon has said he would never do a government-led rescue deal again.

First Republic's business and stock-market valuation were long the envy of the banking industry. Its customers are wealthy individuals and businesses, primarily on the coasts. Its lending business revolves around making huge mortgages to clients like Mark Zuckerberg. Few of those loans ever went bad. The bank had about $213 billion in assets as of the end of 2022.

The bank's profits rose in 2022, but the Fed's aggressive rate increases took a toll. First Republic's wealthy customers were no longer as content to leave huge sums of money in bank accounts that earned no interest.