The sale of struggling First Republic to JPMorgan Chase this week was supposed to draw a line under a US banking crisis that erupted with the collapse of Silicon Valley Bank in March. One group clearly did not get the memo: short sellers.
PacWest, Western Alliance, Comerica and Zions Bancorp were among the US regional lenders swept up in a fresh round of sell-offs Tuesday. Stocks reversed some of their losses on Wednesday, but did not recover from earlier drops. California-based PacWest is nursing a 32 per cent decline this week.
The focus on PacWest, which ranked 53rd among US lenders with $41.2bn in assets at the end of last year, should not surprise. As a west coast bank with exposure to the tech industry, PacWest is seen to be vulnerable to similar deposit flights that led to the failures of SVB and FRB.