After closing session at a record low on Monday, First Republic Bank (NYSE:FRC) has managed some recovery, climbing as much as 21% premarket on Tuesday.
The rebound comes as investors swallow an aid proposal from JPMorgan (JPM) to stabilize the troubled lender.
On Monday, the Wall Street Journal reported that JPMorgan Chase (JPM) chairman and CEO Jamie Dimon is in talks with chief executives of other large banks to stabilize FRC.
The executives are focusing on how the industry can arrange for an investment that would bolster the bank’s capital. One option being discussed could be the conversion of some or all of the $30B in deposits into a capital infusion.
The report followed a series of downgrades by S&P citing “substantial long-term challenges for the business.” The ratings agency noted that despite support from major US banks, it may not be enough to stem the long-term liquidity and profitability challenges for First Republic (FRC).
The rating cuts prompted a collapse in the stock, which closed at a record low level of $12.18 on Monday. FRC shares have lost 90% in value over the past two weeks
More on the bank crisis:
First Republic Bank stock sinks to all-time low as S&P downgrades again
First Republic credit ratings cut to junk by Moody’s
First Republic Bank stock slumped after dividend pause
First Republic: Common Shares Remain A Relatively Poor Choice
