Shares of U.S. regional bank PacWest came under pressure in premarket trading on the New York Stock Exchange on Thursday. The institution, which is looking for strategic options, pledged additional assets in order to be able to borrow more under the Federal Reserve's discount window. Shares slumped 27 percent to $4.47 in premarket trading. Shares of other financial institutions, including Western Alliance Bancorp, KeyCorp and Zions Bancorp, also slipped in premarket trading.
PacWest said it still had over $15 billion in readily available liquidity. That's more than enough to cover the bank's $5.2 billion in uninsured deposits. In the week ending May 5, deposits shrank by about 9.5 percent. Shares of the Los Angeles-based bank plunged to a record low last week. Earlier, the institution announced that it was considering the sale of strategic assets. Since the beginning of the year, they have lost around 74 percent of their value. The trigger for investors' fear of a new financial crisis was the collapse of the Silicon Valley Bank at the beginning of March, which had led to massive outflows of funds from regional banks.
At the beginning of the week, the shares of the regional bank PacWest had initially gained up to 30 percent after the U.S. lender drastically cut its dividend. "Given the stock's extreme volatility recently, we believe this dividend cut makes sense and can support the pace of capital formation," RBC Capital Markets analysts stated. The shares had fallen to a record low last week.
The recovery of the regional banks Western Alliance and Zions also cooled from more than ten percent at times to growth of 0.6 and 2.1 percent. The stocks had to lose feathers last week because investors feared further turbulence after the collapse of the First Republic Bank. The KBW Regional Banking Index fell by almost three percent on Monday after posting its biggest gain in seven weeks on Friday.