First Republic Bank is in talks with JPMorgan and Morgan Stanley over a lifeline, The Wall Street Journal reports

New York (CNN) First Republic Bank, facing a crisis of confidence from investors and customers, is actively discussing options for a lifeline — including an acquisition, according to The Wall Street Journal.

Huge Wall Street banks including JPMorgan and Morgan Stanley are taking part in Thursday’s discussions, the Journal reported. A spokesman for the First Republic declined to comment on CNN.

Both Fitch Ratings and S&P Global Ratings downgraded First Republic Bank’s credit rating on Wednesday amid concerns that depositors could withdraw their money from the bank. That sent shares plummeting 26% on Thursday, and the stock tripped multiple circuit breakers designed to keep shares from falling.

First Republic’s troubles reflect ongoing concerns about the banking system following the collapse of Silicon Valley Bank and Signature Bank.

Many regional banks, including First Republic, have large amounts of uninsured deposits in excess of the FDIC’s $250,000 limit. While not nearly as high as SVB’s massive percentage of uninsured deposits (94% of the total), First Republic has a whopping 68% of all deposits that are uninsured, according to S&P Global.

That caused many customers to leave the bank and put their money elsewhere, which posed a problem for First Republic: It has to borrow money or sell assets in order to pay customers their deposits in cash.

To make money, banks use part of customer deposits to lend to other customers. But First Republic has an unusually high liabilities-to-deposits ratio of 111%, according to S&P Global. That means the bank has lent out more money than it has in customer deposits, making it a particularly risky bet for investors.

READ :  Chevron is awash in cash and plans to smack motorists in the face for $75 billion

Check out this interactive content on

The Federal Reserve created a credit system to prevent regional banks from failing after the collapse of the SVB. The facility will allow banks to lend their government bonds to the Fed as collateral for one-year loans. In return, the Fed will give banks what the banks paid for Treasury bonds, which fell over the past year as the Fed hiked interest rates.

This extraordinary federal intervention does not appear to have been enough to satisfy investors.

First Republic on Sunday announced a deal with JPMorgan to get quick access to cash when needed, and the bank then said it had $70 billion in idle assets it could use to quickly pay for customer withdrawals when needed .

As shares plummeted Thursday, First Republic realized it needed more help, the Journal said. But a deal is far from certain.