At least twenty regional banks in the United States are in turmoil as a result of Silicon Valley Bank’s bankruptcy. Regional banks’ stock prices plunged and they were placed in and out of trading halts.
Once trading began, shares of First Republic Bank fell by more than 65 percent, leading to a decline among banks as regional institutions face pressure. Several regional bank stocks, such as Western Alliance Bancorp and Zions Bancorporation, also dropped precipitously.
When the bank stocks swung widely, some courageous investors were able to generate astounding gains due to the volatility. Approximately twenty minutes into trading, the Dow Jones Industrial Average, which had initially declined by 0.7%, recovered modestly.
Nonetheless, the broad-based S&P 500 stayed down 0.4% and the tech-heavy Nasdaq Composite Index fell 0.3%.
Banks were likewise savaged in Europe. The benchmark Stoxx Europe 600 Banks index revealed that the leading 42 EU and UK banks decreased by 5.6%.
The drama was partly ignited by a bank run that caused Silicon Valley Bank to fail. On Thursday US time, $42 billion was removed from the bank at a rate of $4.2 billion per hour.
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Bank Shares Fluctuate
Metropolitan Bank in New York sank by over 44 percent, PacWest Bancorp in Los Angeles fell by more than 21 percent, and First Horizon in Memphis fell by more than 20 percent. Although assuring customers on Sunday that its situation was extremely strong, First Republic Bank, whose assets totaled over $212 billion, declined.
Western Alliance Bancorp, which has total assets of over $67 billion, said in a statement on Monday that deposit outflows had been “modest” and that it has increased its borrowing capacity to better fulfill clients’ needs.
The decline of the regional mid-sized banks follows last week’s record downfall of Silicon Valley Bank. The corporation was taken over by federal regulators after depositors flocked to withdraw their accounts following the bank’s declaration that it needed to raise billions of dollars to secure its books.
Analysts anticipated that the failure of Silicon Valley Bank would erode investor and consumer confidence in smaller banks, prompting depositors to move their funds to “too large to fail” Wall Street banks.
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