US regional banks sink on the stock market after the rescue of First Republic

First Republic Bank headquarters in San Francisco, in a picture from this Monday. Godofredo A. Vásquez (AP)

The banking storm in the United States continues to abate.

Investor doubts about the financial health of regional banks continue after the intervention and sale of First Republic Bank.

This Tuesday, the prices of several of them have plummeted and have dragged down the entire financial sector.

The stock markets of the United States and Europe have closed with losses, while the Federal Reserve meets to decide on interest rates.

The shares of PacWest Bancorp have closed the session with a fall of 27.8% after falling more than 40% during the session.

The entity based in Beverly Hills, in Los Angeles (California) seems the weakest link due to its similarities with the also Californian Silicon Valley Bank and First Republic Bank, both intervened.

So far this year, PacWest has lost more than 70% of its value on the stock market and has a market capitalization of less than 800 million dollars (around 700 million euros at current exchange rates).

Larger is Western Alliance Bancorporation, a regional banking group based in Phoenix (Arizona), which has closed with a 15% drop in the Stock Market, although at times it has plummeted more than 25%.

The New York Metropolitan Bank has been another of the hardest hit, with a fall of 20.45%.

It is a small entity with a market capitalization of around 200 million dollars.

RBB Bancorp, another small Californian bank strong in the Chinese community, has lost 16% of its value, less than 200 million dollars.

West Reading, Pennsylvania-based Customers Bancorp has lost 12.86%.

Zions Bancorp ended the session down 10.8%, while KeyCorp lost 9.4%;

Truist Financial is down 7.6%;

US Bancorp is down 7%, and Citizens Financial and Huntington Bancshares, more than 6%.

Large entities have resisted better, but have also suffered falls between 1.6% for JPMorgan and 3.8% for Wells Fargo.

The main indices in the United States have closed the session with falls of more than 1%.

The SP500, the most representative index, has yielded 1.16%, while the Dow Jones Industrial Average has lost 1.08% and the Nasdaq, 1.4%.

Following the purchase of First Republic Bank, JPMorgan Chief Executive Jamie Dimon has indicated that another smaller bank may remain in trouble and investors are trying to identify potential victims.

“This part of the crisis is over,” he said, referring to the bailed-out bank.

This part?

Investors ask for other parts.

bearish attacks

Many funds have made bearish bets on the prices of regional banks, according to data from traders consulted by Bloomberg.

While the lofty bearish positions are not surprising after the collapses of various entities, they may be adding pressure to stocks.

High-risk bear fund operators have been largely responsible for the wave of sales that broke out on Tuesday and that later led other investors to sell as well, according to a note by John Flood, a partner at Goldman Sachs Group, cited above. by the financial agency.

The fall of the banks in the stock market occurs while the Federal Reserve's monetary policy committee meets.

The committee concludes its two-day meeting on Wednesday, after which it will announce its decision.

An increase in interest rates of 25 basis points (0.25 percentage points) is expected, to the range of 5%-5.25%.

The financial instability unleashed since the fall of Silicon Valley Bank on March 10 also has a restrictive financial effect.

There are three banks that have followed a similar process.

Liquidity leak, stock market crash, intervention of the Federal Deposit Insurance Corporation (FDIC), cleanup of its balance sheet and sale of the bulk of assets and liabilities to another entity.

With Silicon Valley Bank and Signature Bank, a buyer was slow to appear, so the FDIC had to guarantee all deposits.

With First Republic Bank, it was possible to sell the entity during the same weekend of the intervention.

The three bailouts are financed by the banks' contributions to the FDIC.

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