US bank stocks nearing crisis-era threshold

It could put further pressure on banks to conserve capital and cut back on lending, adding a drag to an economy already at risk of a recession after the Federal Reserve’s steep interest-rate increases over the past 14 months.

The collapse of First Republic Bank worsening fears about the solvency of regional lenders. Picture: Jeff Chiu/AP

The selloff in US bank shares is threatening to push them below a technical threshold that could signal more pain ahead for the broader stock market.

With the collapse of First Republic Bank worsening fears about the solvency of regional lenders, investors have pummelled financial stocks, leaving the S&P 500 financials index on the verge of falling back below its 2007 peak.