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The
regulator's seizure of First Republic Bank and its assets sale
to JPMorgan Chase & Co on Monday brought the banking sector
turmoil back to the fore and sparked a selloff as investors
fretted over the next shoe to drop.
The KBW Regional Banking Index closed at its lowest level since
December 2020 on Tuesday.
"The tide of concern is rising about the ailing health of
regional U.S. bank portfolios, with many sitting on large
unrealised losses, at a time when deposit flight is all the
rage," said Susannah Streeter, head of money and markets at
Hargreaves Lansdown.
"The ease of withdrawals in the digital age is causing increased
nervousness, given the speed of banking collapses over the past
two months."
PacWest shares declined 10.5% before the bell after closing at a
record low on Tuesday. Western Alliance Bank shed 7.2%, while
Comerica and Zions Bancorp fell 3.3% and 2.6%, respectively.
PNC Financial Services Group Inc dipped 1.8%. The lender on
Tuesday said the parent company and its banking unit could offer
up to $15 billion of its commercial paper to provide additional
liquidity.
Later in the day, the U.S. Federal Reserve is expected to
deliver a 25 basis-point interest rate hike and comment on the
recent bank failures in a stiff rate regime.
(Reporting by Medha Singh in Bengaluru; Editing by Dhanya Ann
Thoppil)
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