JPMorgan and Morgan Stanley in talks over First Republic, WSJ reports

JPMorgan Chase & Co. and Morgan Stanley are among several major banks discussing a possible deal with First Republic Bank that could include a significant capital injection to support the troubled California lender, the Wall Street Journal reported, citing people familiar with the matter.

First Republic is working on potential options, including a capital increase, People told the magazine. While a complete takeover of the bank is also possible, some people say it is unlikely at the moment, the newspaper writes.

On Thursday, First Republic shares fell 36%. The San Francisco-based bank is exploring strategic options, including a sale, and is expected to generate interest from larger competitors, Bloomberg News reported late Wednesday.

The lender’s shares fell sharply after regulatory arrests of other regional lenders Silicon Valley Bank and Signature Bank last week.

First Republic specializes in private banking and wealth management and has made efforts to distinguish itself from SVB Financial Group Silicon Valley Bank. Unlike SVB, whose biggest clients were startups and venture capital firms, First Republic said no single sector accounted for more than 9% of total enterprise deposits.

On Friday, Silicon Valley bank SVB collapsed into the Federal Deposit Insurance Corporation after its tech start-up customer base grew restless and withdrew deposits.

First Republic Bank is working with JPMorgan, overcoming difficulties. On Sunday, the same day Signature Bank was turned over to regulators, First Republic said it has “further strengthened and diversified its financial position” by securing additional liquidity from the Federal Reserve Bank and JPMorgan.

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