Regional banks in US continue slide as crisis deepens
Shares in regional banks fell further today as the crisis among regional banks in the US continues.
Western Alliance was one of the worst hit, trading nearly 40 per cent lower. It vehemently denied a report from the Financial Times that it was considering a sale of all or parts of its business.
The Arizona-based lender said the story was “absolutely false” and that “there is no truth to it”.
“There is not a single element of the article that is true. Western Alliance is not exploring a sale, nor has it hired an advisor to explore strategic options,” the bank said. It is considering legal action against the paper.
Fellow US bank First Horizon also fell nearly 40 per cent after the Canadian TD Bank pulled out of a possible acquisition.
In a joint statement, the banks said: “Because there is uncertainty as to when and if these regulatory approvals can be obtained, the parties mutually agreed to terminate the merger agreement.”
Investors fear that Memphis-based First Horizon will now be caught up in the wider banking panic.
The news comes just a day after Pacwest confirmed it was exploring “all options to maximise shareholder value” following reports that it was considering a sale. Its shares are trading nearly 50 per cent lower today.
Regional lenders were suffering a steep sell-off across the board. Metropolitan Bank was down over 10 per cent while Zions Bancorp was trading over eight per cent lower. The KBW Regional Bank index was down nearly four per cent.
Many share the same business model that upended Silicon Valley Bank with large unrealised losses on bond portfolios and a high ratio of uninsured deposits.
While Fed chair Jerome Powell said the banking system was “sound and resilient” as he hiked interest rates again yesterday, the crisis has already become the biggest crisis since 2008.
IG’s Chris Beauchamp said: “US banks are coming under heavy pressure, threatening once again to upend the stability of the US financial system less than a day after Jerome Powell pronounced it healthy. “