Deposit outflows continue to occur in the entity, which has led Jamie Dimon, CEO of JP Morgan, to advise First Republic on the different strategic alternatives that it can carry out.
He First Republic Bank surprises again in the market. US bank shares rebounded almost 30% on Wall Street after losing 47% on Monday after announcing that the entity and other US banks are negotiating a second bailout for the firm.
The deposit outflows continue to occur in the entity, which has led to Jamie Dimon, CEO of JP Morganto advise First Republic on the different strategic alternatives that it can carry out.
Among them is a new negotiation with the big US banks in an attempt to raise additional capital, according to ‘Wall Street Journal’. The negotiations contemplate that the larger entities inject capital directly into the bank.
Last Thursday, 12 banks decided to give the First Republic liquidity with US$30 billion through uninsured deposits to try to avoid further contagion to the financial system. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo each made an uninsured deposit of $5 billion, while Goldman Sachs and Morgan Stanley each deposited $2.5 billion. BNY Mellon, PNC Bank, State Street, Truist and US Bank followed suit with deposits of $1 billion each.
After this injection, the value was able to better weather the instability at the end of last week, although some experts such as bill ackman They qualified this decision as negative. “The structurally important banks would never have made this low-yield investment in deposits unless they were pressured to do so and without guarantees that First Republic Bank’s deposits would be backed in the event of failure.”, said the founder and CEO of the hedge fund Pershing Square Capital.
These fears were reflected this Monday with the collapse of the value and the continuation of outflows of deposits in the entity. According to CNBC and ‘Wall Street Journal, this circumstance has led to Jamie Dimond, CEO of JP Morgan, to advise First Republic on the different strategic alternatives What can the bank do to avoid bankruptcy? These include a capital increase or the sale of the bank.
Source: Ambito
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