Shares in California lender PacWest plummet amid fears of new US banking crisis
The California lender PacWest has sought to calm markets and said it is in talks with several potential investors as its shares plummeted by as much as 60%, reigniting fears about a US banking crisis.
PacWest shares plunged in after-hours trading after Bloomberg News reported that the bank was considering strategic options including a sale or a fundraising round. It is the latest US regional bank to seek a lifeline after First Republic Bank was sold to JP Morgan after talks over the weekend.
The Los Angeles-based PacWest sought to reassure investors by saying it had not experienced out-of-the-ordinary deposit flows. “Recently, the company has been approached by several potential partners and investors – discussions are ongoing,” the bank added.
Investors worry about similarities with Silicon Valley Bank, the tech lender that collapsed in March, such as its ties to the tech community and large uninsured deposits.
Bill Ackman, the chief executive of the New York hedge fund Pershing Square, warned that the entire US regional banking system was at risk. He wrote on Twitter, before PacWest’s statement: “Confidence in a financial institution is built over decades and destroyed in days. As each domino falls, the next weakest bank begins to wobble.
“We are running out of time to fix this problem. How many more unnecessary bank failures do we need to watch before the FDIC [Federal Deposit Insurance Corporation], and our government wake up? We need a systemwide deposit guarantee regime now.”
<p lang=«en» dir=«ltr» xml:lang=«en»>The regional banking system is at risk. SVB's depositors' bad weekend woke up uninsured depositors everywhere. The rapid rise in rates impaired assets and drained deposits. Zeroing out shareholders and Read more on theguardian.com
