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(Bloomberg) — First Republic Bank rallied after closing at a record low Monday, as JPMorgan Chase & Co. charted out a new plan to help the firm.
The stock jumped as much as 33% to $16.16 with fellow regional lenders including Western Alliance Bancorp and PacWest Bancorp also rising. The KBW Regional Banking Index is higher by as much as 5.5%, boosted by a broad rally across the sector.
JPMorgan Chase Chief Executive Officer Jamie Dimon hatched a new plan to aid First Republic, Bloomberg News reported Monday, citing people familiar with the situation. Under the plan, some or all of the $30 billion in deposits that a group of US banks injected would be converted into a capital infusion for the California lender.
A potential conversion “could add much needed stability and is another vote of confidence for the embroiled lender,” Bloomberg Intelligence analyst Herman Chan wrote.
The rally follows a broad recovery in the banking sector across Europe and the US, as contagion concerns ease following UBS Group AG’s rescue deal for Swiss lender Credit Suisse Group AG.
Still, investor confidence in First Republic has waned after the lender was downgraded again Sunday by S&P Global Inc., days after the ratings firm cut the lender to junk. First Republic’s share price slumped in the past two weeks as depositors pulled back money after the failure of Silicon Valley Bank dented sentiment.
The bounce leaves the stock down about 86% from its price before the SVB news came out.
Read More: Four Banks Collapse and a Fifth Wobbles in 11 Days of Turmoil
Major Wall Street lenders are joining in on the Tuesday rally, with Citigroup Inc., Wells Fargo & Co. and Bank of America Corp. all rising more than 3% each.
US officials are mulling ways they could temporarily expand Federal Deposit Insurance Corp. coverage to all deposits if the crisis grows, Bloomberg News reported, citing people with knowledge of the talks.
Read More: US Studies Ways to Insure All Bank Deposits If Crisis Grows
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