Trading in US banks halted as financial panic spreads
Two more US regional banks saw their shares suspended on Thursday, amid the worst crisis to hit the country’s financial sector since 2008.
Regulators temporarily suspended trading in shares of Los Angeles-based PacWest and Arizona’s Western Alliance after their prices fell dramatically.
PacWest Bancorp said late Wednesday it was in talks with potential partners and investors about strategic options after its shares dropped by as much as 60%.
“Recently, the company has been approached by several potential partners and investors – discussions are ongoing,” the bank announced.
But investors were not reassured and the sell-off continued on Thursday. PacWest’s shares fell 50% and affected other regional banks. Western Alliance plunged 45% before trading was halted. The bank’s stock has shed more than 60% of its value so far this year. Another mid-sized bank, First Horizon, lost almost 40% of its value on Thursday after Canada’s Toronto-Dominion Bank Group scrapped its planned $13.4 billion takeover of the lender.
“We are running out of time to fix this problem. How many more unnecessary bank failures do we need to watch before the FDIC [Federal Deposit Insurance Corporation], and our government wake up? We need a systemwide deposit guarantee regime now,” Bill Ackman, the CEO of the New York hedge fund Pershing Square, said.
He warned that the entire US regional banking system is at risk. “Confidence in a financial institution is built over decades and destroyed in days.”
The development comes after another mid-sized bank, First Republic, was seized by US regulators and sold to JPMorgan earlier this week. Depositors had pulled $100 billion from First Republic, fearing their money was no longer safe. The bank became the fourth US lender to collapse this year, following Silvergate Capital, Silicon Valley Bank, and Signature Bank.
For more stories on economy & finance visit RT's business section
