Another California lender is looking for rescue amid biggest banking crisis since 2008
PacWest Bancorp (NASDAQ: PACW) shares fell more than 55 percent in after-hours trading on Wednesday following news that company executives were considering a potential sale.
Bloomberg reported, citing anonymous sources, that the regional bank, which has been weakened by the failure of three California-based lenders, has been contemplating a number of strategic alternatives, including a sale.
Shares of the Beverly Hills-based bank have already taken a hit in the aftermath of Silicon Valley Bank’s failure in March. PacWest’s stock has plunged 76 percent from more than $26 on March 8 to $6.42 as of 6:33 p.m. on May 3.
The news comes just hours after the Federal Reserve said that the worst of the banking turmoil was over. Following the conclusion of the Federal Open Market Committee (FOMC) meeting on Wednesday, Fed officials reiterated that the “banking system is sound and resilient.”
On May 1, First Republic Bank was seized by the Federal Deposit Insurance Corp. (FDIC), which announced that most assets of the troubled bank would be bought by JPMorgan Chase.
“To protect depositors, the FDIC is entering into a purchase and assumption agreement with JPMorgan Chase Bank, National Association, Columbus, Ohio, to assume all of the deposits and substantially all of the assets of First Republic Bank,” the FDIC stated.
The problems of financial institutions, such as Silicon Valley Bank, Signature, and First Republic, that were at the center of the banking crisis “have now all been resolved,” and depositors have been protected, Fed Chair Jerome Powell said during a post-FOMC press conference.
President Joe Biden also reiterated that the U.S. banking system is “safe and sound” after federal regulators facilitated the sale of First Republic Bank.
Speaking from the White House on May 1 to mark National Small Business Week, Biden announced that all First Republic insured and uninsured depositors would be protected. Taxpayers would not be on the hook, Biden stated.
“These actions are going to make sure that the banking system is safe and sound,” the president said.
At the end of 2022, PacWest was the nation’s 53rd-largest commercial bank, with $41 billion in total assets, according to the Federal Reserve.
By Emel Akan
