Shares of First Republic reversed their losses and regional bank stocks pushed higher after CNBC’s David Faber reported that major U.S. banks are discussing a rescue plan for the bank that could include deposits totaling about $20 billion or more.
First Republic shares were up 10% and halted for volatility after the news. The bank stock had been down more than 30% earlier in the day.
Elsewhere, the SPDR S&P Regional Bank ETF (KRE) rose 5%, while Western Alliance and PacWest gained 23% and 11%, respectively. All three had declined earlier in the session.
The bank stocks came off the lows earlier in the session after the Wall Street Journal reported on that JPMorgan and Morgan Stanley were among the banks considering supporting First Republic.
The collapse of Silicon Valley Bank last Friday has left investors scrambling to identify other regional banks that have similar balance sheet issues, namely a high rate of uninsured deposits and bonds or loans with a long time to maturity.
First Republic had the third-highest rate of uninsured deposits among U.S. banks, behind SVB and Signature Bank, which was closed by regulators over the weekend, according to a note from Raymond James. First Republic’s stock was down nearly 75% in March as of Wednesday’s close, and the bank’s debt has been downgraded by S&P Global Ratings and Fitch Ratings.
