Traders work on the floor of the New York Stock Exchange in New York City on April 26, 2023.
Michael M. Santiago | Good pictures
The rout in regional banks picked up steam again on Thursday morning as many stocks prepared to open trade with significant losses.
PacWest fell 40% in premarket trading. The slide began Wednesday evening following news that the Los Angeles-based bank was exploring strategic options, including a potential sale.
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PacWest shares were poised to fall sharply on Thursday.
“It will continue to evaluate all options to maximize shareholder value,” the bank said in a statement. PacWest’s strategic review was first reported by Bloomberg News and later confirmed by CNBC.
Meanwhile, Tennessee-based First Horizon also fell 40% after the regional lender and TD Bank announced they were ending their merger agreement. Banks a Press release The move is due to uncertainty about when TD will receive regulatory approval for the deal and is not related to First Horizon.
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First Horizon’s shares were under pressure after the lender’s tie-up with TD Bank was called off.
Other notable decliners included Western Alliance, which fell more than 13%, and Zeons Bancorp, which fell about 11%. The SPDR S&P Regional Banking ETF (KRE) fell 3.7%.
Thursday’s moves come less than a week after First Republic was seized by regulators and sold at a discount to JPMorgan Chase, marking the regional bank’s third failure since early March.
First Republic spent weeks looking for a market solution to shore itself up after massive deposit withdrawals in the first quarter, but nothing materialized and regulators stepped in.
Several regional banks saw deposit outflows around the collapse of Silicon Valley Bank in March, raising questions about the stability of their finances and the value of some assets that were not marked to market. Anticipated regulatory changes have also clouded the group’s long-term profit outlook.
JPMorgan CEO Jamie Dimon and Federal Reserve Chairman Jerome Powell expressed confidence this week that the initial wave of bank failures had passed, but the drop in stocks showed investors still lacked confidence.
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