Regional Bank Stocks Plummet as First Republic Failure Sparks Investor Concerns
PacWest falls more than 20% as regional bank stocks slide to new lows
Regional bank stocks saw their losses for the week deepen as investors digest the failure of First Republic. The California-based bank was not the only regional lender under pressure. Shares of Western Alliance dropped 15%. The SPDR S&P Regional Banking ETF (KRE) sank 6.3%. The steep declines deepened losses in the sector from Monday. Over the weekend, regulators seized troubled regional bank First Republic and sold it to JPMorgan Chase. First Republic is the third failure of a large regional bank this year, following Silicon Valley Bank and Signature Bank in March.
The reasons for Tuesday’s declines were not immediately clear. JPMorgan Chase CEO Jamie Dimon said Monday that the initial phase of the regional bank crisis was “over,” and there was cautious optimism among Wall Street analysts that the deposit flight issues had been contained. First Republic reported a decline in deposits of about 40% during the first quarter, raising questions about how the bank could survive on its own. Most other regional banks reported smaller deposit declines, however, and some, such as PacWest, reported that deposits began rebounding in late March.