Dimon Leads First Republic Funding Efforts, Stock Tumbles 45% Amid Wild Volatility

Jamie Dimon, CEO at JPMorgan Chase & Co. JPM, is leading talks with other leaders of prominent banks to resolve the First Republic Bank FRC crisis, the Wall Street Journal reported on Monday. 

Last week, 11 of America's major banks gathered $30 billion to provide a deposit infusion at First Republic, with Chase putting $5 billion alongside Bank of America BAC, Citigroup C and Wells Fargo WFC.

A bank official said on Sunday that First Republic Bank is well-positioned to handle short-term deposit outflows. Since the start of Silicon Valley Bank crisis, deposit withdrawals from First Republic have exceeded $70 billion, according to the WSJ.

The Latest On First Republic: On Monday, the Wall Street Journal said sources familiar with the matter raised the possibility of transforming some or all of the $30 billion in deposits into a capital injection.

The major banks are making every effort to avert system-wide confidence crises as a result of bank collapses. It looks like a rerun of the months leading up to the 2008 collapse of Lehman Brothers, when JPMorgan and Dimon purchased Bearn Stern following its bankruptcy.

Yet many investors remain skeptical that the measure would be adequate to bolster trust in smaller troubled banks.

On Monday, trading in First Republic shares was briefly halted, before the stock continued to fall up to 45% on the day to $12 per share, hitting fresh all-time lows. 

Read next: As Credit Suisse, Signature Bank Collapse, Is Your Money Protected? Are Your Investments Safe?

First Republic Downgraded Further To Junk: S&P Global Inc. SPGI lowered FRC's credit rating on Sunday from BB+ to B+, deep into junk territory, and issued a warning that more downgrades are probable due to "high liquidity stress with substantial outflows." 

The report said that although the influx of deposits may alleviate near-term liquidity difficulties, it "may not solve the substantial business, liquidity, funding, and profitability challenges" the bank is likely to face.

First Republic Bank, daily candlestick price chart – TradingView

Read more: JP Morgan Advising First Republic On Strategic Alternatives, Including Capital Raise

JPMorgan CEO Jamie Dimon. Benzinga file photo by Dustin Blitchok.