Economy

US Regional Banks Remain Under Pressure as First Republic Sinks

Bloomberg By Allegra Catelli and Jan-Patrick Barnert,
Tags
Bank Run
Global Economic Collapse

Turmoil continued to engulf shares in banks as investors rushed to reduce exposure to the banking industry after seeing equity stakes wiped out at Silicon Valley Bank and Signature Bank.

The collapse of SVB Financial Group’s Silicon Valley Bank on Friday and Signature’s seizure by regulators over the weekend sent tremors through the broader banking system. Regional lenders plunged to start the week, with the KBW Regional Banking Index sinking by as much as 12%, its sharpest intraday plunge since March 2020.

  • First Republic Bank sank 67% for a record drop

  • Western Alliance Bancorp lost 76%, its biggest drop ever

  • PacWest Bancorp was down 41%, hitting a record low

“The market is likely to remain very cautious despite regulators stepping in,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets. “This is a difficult position Fed is in, on the one hand it needs to keep hiking to arrest inflation, but also it needs to protect the financial system. Feels like a lose-lose situation for the Fed and the market.”