Share prices of several United States regional banks tanked in after-hours trading on May 3, despite Federal Reserve Chairman Jerome Powell calling the banking sector “sound” and “resilient” just hours before.
One such regional bank, PacWest Bancorp, fell a whopping 52.5% in after-hours trading after Bloomberg reported that the bank would explore strategic options on May 4. It has been seen by some as another bank to potentially fall amid a U.S. banking crisis.
The bank is reportedly considering a sale or capital raising, Bloomberg said, citing people familiar with the matter.
Meanwhile, Western Alliance Bancorp (22.4%), Metropolitan Bank (16.2%) and HomeStreet (7.8%) were among the other hardest-hit regional banks.
Metropolitan Bank once offered services to crypto firms but closed its digital asset vertical in January because the firm wasn’t content with how the cryptocurrency industry was developing.
Crypto gaining momentum as US Regional Bank stocks tumble after hours:— Acquire.Fi (@Acquire_Fi) May 4, 2023
PacWest, $PACW: ⬇️60%
Western Alliance, $WAL: ⬇️30%
Metropolitan Bank, $MCB: ⬇️20%
Valley National, $VLY: ⬇️15%
HomeStreet, $HMST: ⬇️11%
Zions Bank, $ZION: ⬇️10%
KeyCorp, $KEY: ⬇️8%
Seems like time to #HODL
Powell’s attempt to quell concerns about the banking sector came as he announced that the Federal Reserve would hike interest rates another 25 basis points:
“Conditions in [the banking] sector have broadly improved since early March and the U.S. banking system is sound and resilient. We will continue to monitor conditions in the sector."
Powell added that Fed was “committed to learning the right lessons from this episode, and we’ll work to prevent events like these from happening again.”
First Republic Bank’s collapse was the second-biggest bank failure of late. Problems first surfaced on April 26, when the news about a government receivership broke out, causing the bank’s share price to plummet 20% in hours.
Several on Crypto Twitter have mocked Powell for stating that conditions in the banking sector “have broadly improved” since early March.
Will Clemente, the founder of digital asset analysis firm Reflexivity Research, tweeted to his 680,300 Twitter followers that the collapse of five banks — SVB, Silvergate, Signature, First Republic and PacWest — “sounds like a very sound and resilient banking system…”
PacWest Bancorp’s 52% fall is set to wipe out about $340 million from its market cap, which was $772 million at the May 3 close, according to Google Finance.