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First Republic Bank
FRC 29.47%
is beefing up its adviser ranks as the troubled lender seeks to stay afloat and plan for a postcrisis future amid a trans-Atlantic crisis of confidence in the banking system.
The California bank this week tapped
Lazard Ltd.
LAZ 3.23%
to help with a review of strategic options that could include a sale, a capital infusion or asset trimming, according to people familiar with the matter. It also hired consulting firm McKinsey & Co. to help map out a postcrisis structure for the bank, the people said.
Lazard and McKinsey have been brought in alongside
JPMorgan Chase
JPM 2.68%
& Co., which had already been hired by First Republic to advise on moves the bank could make to regain its footing after the failure of two other lenders caused its depositors to flee.
First Republic shares have swung wildly in recent days as investors place bets on whether it will succeed in that effort. After suffering steep declines in recent days, shares of First Republic soared 29% on Tuesday to close at $15.77 as hopes grew that the bank will find a way to ride out the storm. On Monday, the stock had dropped to its lowest level ever, touching $11.52 intraday. Since March 8, the stock has lost more than 85% of its value and its market capitalization stands at just under $3 billion.
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JPMorgan and other big banks agreed last week to deposit $30 billion in First Republic to try to shore up the bank. Some of those banks’ CEOs, led by JPMorgan’s
Jamie Dimon,
have continued discussing ways to help First Republic after the move failed to sufficiently bolster confidence in the lender, The Wall Street Journal reported Monday. Options include putting those deposits to work in a different form.
The talks started after 11 big banks banded together last week to essentially return deposits that had fled First Republic, which was swept up in the contagion that followed the March 10 failure of Silicon Valley Bank and the subsequent seizure of Signature Bank. The crisis boiled over this weekend, when
UBS Group AG
was forced to purchase its beleaguered Swiss rival
Credit Suisse Group AG
.
The addition of Lazard and McKinsey underscores what a complicated situation First Republic is in—one that defies an easy fix. Finding a willing buyer for the bank, whose customers had withdrawn some $70 billion since Silicon Valley Bank’s collapse, selling stock at these depressed levels and other alternatives all face their own substantial hurdles.
Adding to the pressure, S&P Global on Sunday downgraded First Republic’s credit rating deeper into junk territory, saying last week’s deposit infusion may not be enough to overcome the bank’s “substantial business, liquidity, funding, and profitability challenges.”
In a sign of the challenges it faces, First Republic suspended its dividend just as the $30 billion rescue was unveiled.
David Benoit contributed to this article
Write to Lauren Thomas at lauren.thomas@wsj.com and Laura Cooper at laura.cooper@wsj.com
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