First Republic Bank shares climb amid report of possible government backstop
By Scott Kanowsky
Investing.com -- Shares in First Republic Bank (NYSE: FRC ) rose in U.S. premarket trading on Wednesday, as negotiators in Washington and on Wall Street reportedly discussed potential government support to stabilize the beleaguered regional lender.
U.S. officials and banking industry executives are in talks over the possibility of government backing in First Republic to bolster confidence in the California-based bank and make it more attractive to wary investors, according to Bloomberg News, citing sources familiar with the matter. The government could also help remove assets that are negatively impacting First Republic's balance sheet, Bloomberg News said.
In a separate report, the Wall Street Journal said banking industry executives are looking at ways to boost First Republic's capital, with banks even potentially positioning to make investments themselves.
This comes after a group of eleven U.S. lenders, including JPMorgan Chase (NYSE: JPM ), Bank of America (NYSE: BAC ), and Citigroup (NYSE: C ), banded together last week to inject $30 billion into First Republic in a bid to replace lost deposits and quell a recent panic sparked by a series of bank failures this month.
The high-stakes talks around First Republic have contributed to heavy volatility in the stock this week. Shares closed up by nearly 30% on Tuesday, rebounding from a sharp drop in the prior session that saw it slip to a record-low closing price of $12.18.
But First Republic has still plunged by more than 80% over the past two weeks as the failure of three U.S. banks, including Silicon Valley Bank, hit smaller lenders and caused customers to rush to withdraw deposits.
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