PacWest Bancorp Reportedly Considering Options as Stock Price Plummets
PacWest Bancorp has reportedly been considering a sale, a breakup or a capital raise.
The regional bank has been considering these options, but hasn’t made a decision, as its stock price has fallen after the collapse of three other regional banks, Bloomberg reported Wednesday (May 3), citing unnamed sources.
Not many potential buyers are interested in the entire bank, and a buyer may have to book a loss marking down some of its loans, and those factors would complicate attempts to make an outright sale, according to the report.
PacWest Bancorp did not immediately reply to PYMNTS’ request for comment.
The bank has lost about 85% of its value of its value since the beginning of March as investors turn away from regional bank stocks amid the turmoil seen in that segment, most recently with Monday’s sale of the failed First Republic Bank to JPMorgan Chase, the Bloomberg report said.
Seeking Alpha reported Wednesday that PacWest Bancorp’s stock plunged 23% in after-hours trading after Bloomberg published its report of a potential sale and other strategic options.
This report comes on the same day that former Federal Reserve Bank of Dallas President Robert Kaplan told Bloomberg Television that America’s regional banking crisis has not yet passed and that the country’s central bank should hold off on interest rate hikes as the troubles in the banking sector continue to unfold.
“I’d prefer to do what’s called the hawkish pause, not raise but signal that we are in a tightening stance, because I actually think the banking situation may well be more serious than we currently understand,” Kaplan said, per the report.
It had been reported Tuesday (May 2) that investors remain concerned about the future of regional banks.
After regulators seized the struggling First Republic Bank and auctioned it off Sunday (April 30) and JPMorgan Chase agreed to acquire it on Monday (May 1), shares of other regional banks dropped on Tuesday, Reuters reported Tuesday.
The troubles at First Republic Bank added to investors’ concerns about regional banks that had begun with the failures of Silicon Valley Bank and Signature Bank in March, according to the report.
As PYMNTS reported Tuesday, the measures taken by regulators through the past several weeks may have done nothing to stem the flow of deposits toward the biggest banks.
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