After several other American banks left the business, PacWest is the latest to see its price fall.
PacWest Bancorp is the latest American bank to be affected by the worst crisis to hit the banking industry since 2008. After its stock dropped 60%, the bank has confirmed that it is talking to possible partners and investors about strategic options.
Shares of the bank fell sharply after US trading hours on Wednesday when news came out that the Los Angeles-based bank was thinking about selling. On Thursday morning, the shares of PacWest fell as much as 48%.
PacWest said on Wednesday that since the sale of First Republic Bank and other news, the bank hadn’t seen any changes in the way people put money. “Our cash and liquid assets remain strong and are more than our uninsured deposits,” it said.
The lender said that talks with possible buyers and investors are “ongoing” and that the company will keep “evaluating all options to maximise shareholder value.”
People who know about the situation told Bloomberg that PacWest has been thinking about splitting up or getting more money. Sources say that a buyer might have to write down a lot of the bank’s loans, which would be a big loss.
The drop in PacWest’s stock price on Wednesday came after US Federal Reserve Chair Jerome Powell said that the chaos in the banking sector was getting better under control. Powell said that the government’s seizure and sale of the struggling First Republic Bank to JPMorgan Chase was “an important step towards ending that period of severe stress” for regional lenders.
After Silvergate Capital, Silicon Valley Bank, and Signature Bank, First Republic is the fourth US bank to fail this year.
Tim Waterer, the head market analyst at KCM Trade, told Bloomberg that the Fed’s comment doesn’t give the market much reason to be confident. “Despite Jerome Powell’s best efforts to calm the market, there is no sign that the banking crisis is over,” he said.
