The actions of PacWest Bancorp and Western Alliance Bancorp they slumped on Thursday, dragging down other regional lenders. the papers of pac west plunged more than 50% in early trading, while shares of Western Alliance they plunged nearly 40%, extending losses from the previous session.
In the case of the first bank, the papers reached a historical minimum. pac west is exploring strategic options, including a possible sale or capital increase. What motivated new fears of a banking crisis in the United States.
The actions of Western Alliance they slumped after the Financial Times said the bank could finalize a possible sale of all or part of its business. The entity denied the information, calling it “categorically false in all respects”, and said it was weighing legal options against the newspaper.
Other companies were tumbling as well: Zion Bancorporation was down 11% and Comerica was down nearly 13%. KeyCorp and Valley National Bancorp were down 7% and 5%, respectively. The KBW Regional Banking index was down 3.6%.
What happened to PacWest?
PacWest Bancorp said late Wednesday that it was in talks with potential partners and investors on strategic options after shares of the Los Angeles-based bank and several other regional US banks fell amid fears of a worsening banking crisis.
In a statement, PacWest said it had not experienced any unusual deposit outflows since the sale of First Republic Bank to JPMorgan Chase & Co. was announced Monday.
The planned sale of its $2.7 billion portfolio of bank financing loans was ongoing and, once completed, would increase its top-quality capital ratio to at least 10% from 9.21%, the bank added.
“In accordance with usual practice, the company and its board of directors continually review strategic options,” PacWest said.
“Recently, the company has been approached by a number of partners and potential investors. Discussions are ongoing. The company will continue to evaluate all options to maximize shareholder value,” he added.
Reuters previously reported on Wednesday that PacWest was exploring strategic options, including a possible sale or capital increase, after a cash injection announced in March failed to inspire confidence in its flagging share price, citing a person familiar with the matter.
The nervousness in the sector comes after a period of relative calm and could restrict the availability of credit throughout the United States and hurt growth.
“Trust in a financial institution is built over decades and destroyed in days. As each domino falls, the next weakest bank begins to falter,” billionaire investor Bill Ackman wrote in a tweet. Ackman asked regulators to establish a broad deposit guarantee.
“Until investors are rewarded for betting on a floundering bank, there will be no supply, and the best sale is last price,” he wrote.
PacWest shares have lost nearly 90% of their value since the regional banking crisis began on March 8. Other regional banks, whose shares have come under pressure this week.
banking crisis
The crisis of America’s regional banks began in March, when a rapid onslaught on social media about Silicon Valley Bank led to its abrupt closure and sent depositors at all regional banks fleeing for the safety of the largest banks.
The problems forced regulators to step in with emergency measures. The markets seemed to calm down at the end of last month.
Although First Republic, a California-based bank for the wealthy, became the third bank to fail since March, regulators expected its sale to JPMorgan at an auction held over the weekend by the Federal Deposit Insurance Corporation (FDIC). , for its acronym in English) put an end to the crisis.
However, the operation revived fears in the market. Some investors warned that the crisis was not over and funds bet that other dominoes could still fall.
Big banks and venture capital firms have been reluctant to offer capital injections to regional banks without state backing, fearing losses on their low-yielding assets such as loans and investment portfolios.
The cost of insuring against further losses in shares of US regional banks stood near a one-month high in options markets on Wednesday.
on WednesdayUS Federal Reserve Chairman Jerome Powell reiterated that the country’s banking system was resilient, while announcing another 25 basis point rate hike.
Source: Ambito
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