Kaja Whitehouse, and Nathan Bomey

USA TODAY

NEW YORK — In an effort to quiet doubts about its financial health, German lender Deutsche Bank said it would buy back $5.4 billion in debt — sending the battered stock soaring.

Across the ocean in New York, JPMorgan investors sent the bank's stock higher on news that CEO Jamie Dimon purchased 500,000 shares in a show of support for the lender, which had suffered a 20% stock drop this year.

The purchase cost Dimon $26.6 million, or roughly his entire earnings, in cash and stock, last year.

How bad will it get for the banks?

The moves to bolster confidence come amid fears that looming economic pressures, which have sent oil prices plummeting, could crimp banks' profits and eat away at their capital buffers. Banks from Berlin to New York have been clobbered this year — with stocks down more than a third in some cases.

"In this kind of environment, we are looking at can banks make money?" said Fred Cannon, director of research at Keefe Bruyette and Woods.

Just the threat of increased financial strain could force U.S. banks to pull back on their dividends and other capital spending programs if it leads to failed government stress tests, Cannon said. European banks, meanwhile, could be forced to put their hands out for money from investors, which will lower returns for current investors, he said.

In an emailed statement, JPMorgan confirmed Dimon's massive stock purchase, which was first reported by The Wall Street Journal. Shares of JPMorgan rose more than 8% to $57.49 on Friday. The stock is still down 13% this year, however.

Deutsche Bank's New York-listed stock shot up 12% to $17.38 a share. The shares, which were down 33% this year as of Thursday, are still below levels hit during the darkest days of the financial crisis, however.

Yellen: Negative rates not "off the table"

Leading up to the debt announcement, fears around Deutsche Bank's ability to repay its debts had sent the cost of insurance to protect against default skyrocketing. In an effort to quell those fears, Deutsche Bank on Friday said its "strong liquidity position" will allow it to acquire $3.4 billion of its European unsecured debt and $2 billion of its U.S. debt.

The tender offer will be extended for seven business days for the Europe debt and 20 business days for the U.S. debt.

European banks have been hit harder than U.S. banks due to added pressures like negative interest rates.

On Thursday, Federal Reserve chief Janet Yellen said negative interest rates in the U.S. aren't off the table — a prospect that could benefit the larger economy but hinder U.S. bank's earnings on loans.

JPMorgan boosted profits to record levels last year due in large part to aggressive cost cutting. But as cost cutting opportunities wane, investors want to see signs that profits will rise on revenue growth.

Follow USA TODAY reporter Kaja Whitehouse on Twitter @kajawhitehouse