New York/London (CNN) Another US regional lender, mired in its worst banking crisis since 2008, is seeking help.
Bawest Bank (PACW)The California-based company confirmed on Thursday that it was exploring “all strategic options” after its share price was halved in after-hours trading. Bloomberg report It is considering a sale.
“Exploring strategic options” is Wall Street parlance for “please help.” The bank recently announced that it is exploring strategic options First Republic Bank (FRC). That regional bank failed on Monday, and JP Morgan bought most of its assets.
“In accordance with normal procedures, the company and its board of directors continue to review strategic options,” Bequest said in a statement. “Recently, the Company has been approached by several potential partners and investors – discussions are ongoing. The Company will continue to evaluate all options to maximize shareholder value.”
Bloomberg, citing anonymous sources, reported on Wednesday that the bank wanted to sell itself, but bidders weren’t coming out of the woodwork. Demerger PacWest Bank or, in the alternative, It is trying to raise capital to support itself, Bloomberg reported.
Many other U.S PacWest’s loans and bonds have fallen in value as regional banks have raised interest rates. Customers pulled their deposits in March, fearing a bank failure. Although the Federal Deposit Insurance Corporation insures accounts held up to $250,000, many businesses have large sums of money in their accounts, most of which are uninsured.
This posed a potential problem for the bank and its competitors: if customers kept overdrawing their accounts, the bank could run out of money to pay them. That made investors nervous: PacWest’s stock has fallen 72% this year.
Bawest appeared to have stabilized in recent weeks after the March collapse of Silicon Valley Bank and Signature Bank. Backwest reported last week Customers have stopped withdrawing their money and 73% of the bank’s deposits are insured. On Thursday, it said 75% of its deposits were insured till May 2.
“The bank did not experience unusual deposit inflows following the sale of First Republic Bank and other news,” the statement said. “Additionally, the company recently paid down $1 billion in debt with our excess liquidity. Our cash and available liquidity remains solid and exceeds our uninsured deposits, which is 188%.”
When First Republic failed earlier this week, investors grew wary that another shoe might drop. PacWest shares gained 28% on Tuesday and another 2% on Wednesday.
Other regional banks also fell in after-hours trading on Wednesday, including Western Alliance (Tail)It is down almost 30%.
