JPMorgan Chase, Morgan Stanley in talks over First Republic capital boost – WSJ

By Scott Kanowsky 

Investing.com — JPMorgan Chase & Co (NYSE:) and Morgan Stanley (NYSE:) are among several big suitors in talks with First Republic Bank (NYSE:) over a sizeable capital injection into the troubled lender, the Wall Street Journal reported on Thursday.

The WSJ, citing people familiar with the matter, said San Francisco-based First Republic is considering several different options, adding that there is still the potential for a full takeover although this path remains unlikely.

Any agreement is still highly uncertain and would require regulatory approval, the WSJ said. But if a deal is to happen, it could come together in the coming days, the people told the paper.

Shares in First Republic Bank shed more than a third of their value at one point on earlier reports that it is exploring strategic options, including a sale.

First Republic did not immediately respond to a request for comment.

The stock has been under pressure in the wake of the failure of Silicon Valley Bank, with investors fretting over potential contagion from the collapse.

First Republic’s credit rating was sharply downgraded by S&P Global (NYSE:) Ratings to “junk” status earlier this week, while Moody’s said it was placing the bank under review for a potential downgrade.

Both agencies flagged growing risks of increased deposit withdrawals for the bank, and that it faces increased pressure on its profitability if it resorts to more expensive funding options than deposits.