Investor concerns have been raised once again over the financial stability of international banks, as several mid-sized lenders have come under scrutiny in recent weeks.
PacWest Bancorp, one of the troubled banks in focus, disclosed in a regulatory filing that deposits fell 9.5% during the week of May 5. This news caused PacWest shares to plummet by 22%, and the bank announced that it had access to $15 billion in immediate liquidity if needed. However, the bank’s stock briefly fell 30% before being halted for volatility, resuming trading and finishing down about 23%.
PacWest is one of several mid-sized lenders that has been under intense scrutiny since Silicon Valley Bank collapsed on March 10, setting off a panic around the financial stability of similarly positioned banks. The LA-based bank had about $15 billion in readily available cash and just $5.2 billion in uninsured deposits. Following the collapse of First Republic Bank last week, PacWest saw a rush of withdrawals of uninsured deposits, prompting it to pledge more of its assets as collateral to shore up its cash position.
Read more: Lessons learned as US banking crisis prompts re-evaluation of liquidity rules
First Horizon, another international bank, saw its share price plunge about 40% over the past couple of months, falling well below the $25 per share. The bank’s stock has been under pressure due to concerns over loan losses and a deteriorating credit environment. Despite this, the bank has reassured its investors that it has ample liquidity and capital to weather any storm.
Huntington Bancshares, the third bank in question, has also seen its stock price drop by more than 25% in recent weeks. The bank has been grappling with a decline in loan demand and a challenging interest rate environment. However, the bank has taken steps to address these challenges, including cutting costs and increasing its digital capabilities. Despite these efforts, investors remain concerned about the bank’s ability to weather the current economic storm.
However, the future outlook for these banks is uncertain, and it remains to be seen how they will fare in the coming months. The ability of these banks to weather the current economic storm will depend on a range of factors, including their ability to adapt to changing market conditions and their resilience in the face of economic challenges.
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