PacWest Bancorp, a regional bank based in Beverly Hills, is considering a sale or fresh capital injection following the collapse of several other regional banks.[0] The bank’s shares plummeted by over 50% in after-hours trading on Wednesday, with investors concerned that the bank could be the next to fail. PacWest’s struggles have been attributed to the Federal Reserve’s rate hike push, which has caused turmoil in the industry. Several other regional banks, including Silicon Valley Bank and Signature Bank, have collapsed this year, leading to fears of a broader contagion.[1] PacWest’s financial reports suggest that while deposits declined significantly through the end of the first quarter, there was a roughly equivalent shift from uninsured to insured deposits within those figures.[2] However, there aren’t many potential buyers interested in the entire bank, which comprises a community lender called Pacific Western Bank and some commercial and consumer lending businesses, and a potential buyer would have to potentially book a big loss marking down some of its loans.[3] The Federal Deposit Insurance Corp. has been urged by critics of the banking system to raise the insurance cap, which usually guarantees most accounts for up to $250,000.[4] Despite regulators considering an expansion of deposit insurance, no official alterations have been declared as of now.[5]
0. “US bank Pacwest – advisers engaged to mull on alternatives, including potential sale” ForexLive, 3 May. 2023, https://www.forexlive.com/news/us-bank-pacwest-advisers-engaged-to-mull-on-alternatives-including-potential-sale-20230503/
1. “US Regional Banks ‘Need Consolidation,’ Canyon’s Lemkin Says” Yahoo Finance, 3 May. 2023, https://finance.yahoo.com/news/us-regional-banks-consolidation-canyon-192332608.html
2. “PacWest Bancorp Stock: The Forest And The Trees” Seeking Alpha, 3 May. 2023, https://seekingalpha.com/article/4599319-pacwest-bancorp-the-forest-and-the-trees
3. “PacWest is considering a sale after its shares sank 85% since March amid the banking industry’s turmoil” Fortune, 3 May. 2023, https://fortune.com/2023/05/03/pacwest-is-considering-a-sale-after-its-shares-sank-85-since-march-amid-the-banking-industrys-turmoil/
4. “PacWest Bank says considering ‘all options’ after its shares plunge more than 50%” CNN, 4 May. 2023, https://www.cnn.com/2023/05/03/investing/pacwest-bank/index.html
5. “Regional Banks Sink as PacWest Weighs Strategic Options” Yahoo Finance, 4 May. 2023, https://finance.yahoo.com/news/regional-banks-sink-pacwest-weighs-213339799.html