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The
collapse of Silicon Valley Bank and Signature Bank sent
shockwaves through global markets, particularly hammering
banking sector shares, despite assurances from U.S. President
Joe Biden and other policymakers.
First Republic Bank rose 21% to $37.50, a day after hitting a
record low of $17.53. Rating's agency Moody's said it was
reviewing the U.S. regional bank for a downgrade.
Western Alliance Bancorp, Citizens Financial Group, KeyCorp,
Comerica Inc, Fifth Third Bancorp, Truist Financial Corp and
Zions Bancorp jumped between 10% and 30%.
The S&P 1500 regional banks sub-industry index has tumbled 20%
in the past three sessions.
Some industry executives and advisers believe small lenders
could be forced to seek saviors if a rout in their stocks does
not let up.
"In order to minimize the risk of deposit outflows, many smaller
banks may be forced to further increase deposit rates (and) this
is not good for any bank's profitability," said UBS Global
Wealth Management Chief Investment Officer Mark Haefele in a
note.
"Though those banks with higher capital ratios, smaller pools of
securities relative to total assets, strong brands, and
diversified funding sources should be better able to weather the
current market dynamics."
A wave of customers have applied to shift their accounts to
large U.S. banks such as JPMorgan Chase & Co and Citigroup Inc
from smaller lenders after the collapse of Silicon Valley Bank,
the Financial Times reported.
(Reporting by Medha Singh in Bengaluru; Editing by Shinjini
Ganguli)
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