Western Alliance Denies ‘Irresponsible’ Reports of Sale
Western Alliance says it will not be the next regional bank to go up for sale.
The Arizona-based lender on Thursday (May 4) denied a report from earlier in the day by the Financial Times (FT) that it was considering a sale.
“There is not a single element of the article that is true. Western Alliance is not exploring a sale, nor has it hired an advisor to explore strategic options," the bank said in a news release.
“It is shameful and irresponsible that the Financial Times has allowed itself to be used as an instrument of short sellers,” the statement continues, with the bank adding that it is “considering all of our legal options in response to today’s article.”
The FT says two people briefed on internal discussions at Western Alliance had said it was exploring strategic options that included a possible sale of all or part of its operations.
As PYMNTS wrote earlier this week, Western Alliance is one of a handful of regional banks who have seen their stock prices fall in the wake of First Republic Bank's recent downfall.
That bank was sold on Monday (May 1) to J.P. Morgan after being taken over by federal regulators in the third banking failure in eight weeks.
Another regional bank, the Los Angeles-based PacWest, is apparently exploring a sale, a breakup or a capital raise.
A report earlier this week by Bloomberg News notes that there aren't many potential buyers willing to buy the bank in its entirety. Further complicating matters is the fact that a buyer would have to take a loss in marking down some of PacWest's loans.
PacWest had lost 85% of its value since the beginning of March as investors try to avoid regional bank stocks amid the turmoil seen in that segment.
According to a Thursday' report by Reuters, the bank's stock fell 50% before trading opened, reaching a record low, following the reports. Western Alliance, meanwhile, saw its stock drop 40% following that initial FT report.
Earlier this week, former Federal Reserve Bank of Dallas President Robert Kaplan warned that the regional banking crisis isn't over, and called on the country’s central bank to hold off on interest rate hikes as troubles in the 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 in a Bloomberg TV interview, hours before the Fed did in fact raise rates.
He added that the markdown in bank equities is solely because of their over-investment in the U.S. Treasury, while the credit phase, which he said is “normally more serious,” has yet to occur.
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