US banking sell-off returns despite forced sale of First Republic

Shares in PacWest and Western Alliance each slumped more than 25%

First Republic Bank seizure and sale was the second-largest US bank failure ever.

Turmoil returned to US bank shares as PacWest and Western Alliance each slumped more than 25%, leading a renewed sell-off in US regional lenders as investors continued to gauge the health of the industry after the second-largest US bank failure ever.

Trading in shares of both banks were halted for volatility, amid the broader slide. Comerica and Zions Bancorp each fell more than 10%, while Charles Schwab, the brokerage with a bank arm that has come under pressure in the wake of the regional banking tumult, sank more than 5%.

The sector’s retreat comes a day after First Republic Bank’s seizure and sale to JP Morgan Chase, and underscores investors’ ongoing concerns about competitors of the four banks that have collapsed since early March. 

JP Morgan Chase chief executive Jamie Dimon was quick to proclaim the current leg of the banking crisis “over” during a conference call discussing his bank’s acquisition of First Republic earlier this week. He recommended everyone “just take a deep breath” even as higher interest rates and stress on the commercial property pose a threat to the banking sector. 

Western Alliance and PacWest are among a number of regional banks investors zeroed in after Silvergate, Silicon Valley Bank, and Signature Bank collapsed in quick succession in recent weeks and demonstrated the threat posed to commercial lenders. 

In Europe, UBS stepped to buy troubled Credit Suisse. 

“Wall Street is wondering which bank could be the next one that needs a rescue and that is making it easy to pick on the other regional banks,” said Ed Moya, Oanda senior market analyst. 

Bloomberg