The banking crisis has continued to persist as a pair of regional banks suffered huge losses on Thursday.
PacWest Bancorp lost over 50 percent of its share value, while Western Alliance saw its shares tumble by over 38 percent.
Even though the banking crisis was coming to the end of its second month, there was no sign that the turmoil was close to ending.
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The shares of several other regional banks, such as Comerica, Zions Bancorp, and Metropolitan Bank Holding, suffered lesser share price declines.
The market reacted after federal regulators closed regional lender First Republic and sold it to JPMorgan Chase.
David Smith, a banking analyst with Autonomous Research, said: “The market is just moving on from the First Republic, looking for the next weakest gazelle.”
The bank crisis has resulted from rapid interest rate increases by the Federal Reserve, which has led to tighter credit, forcing investors to reconsider their risks.
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PacWest Bancorp and Western Alliance are not experiencing a classic bank run like Silicon Valley Bank.
PacWest stated that its deposits were higher than at the end of March, while Western Alliance held $48.8 billion on Tuesday.
There is no public indication of a similar exodus at either of the banks that investors hammered Thursday.
Efforts by the troubled regional banks to build a firewall of fresh capital are battling a lack of investor confidence.
However, there is no sign at this point that the survival of either bank should be in doubt.
Despite the uncertain future for some regional banks, there are some positive signs in the industry.
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Many larger banks, such as JPMorgan Chase and Bank of America, have reported strong earnings in the first quarter of 2023, as rising interest rates have led to higher profits on loans.
In addition, some regional banks with more diversified customer bases and less exposure to industries battered by the crisis, such as hospitality and travel, have fared better than their peers.
It remains to be seen how long the current banking crisis will last and what the ultimate fallout will be for the industry.
But for now, the focus is on shoring up confidence in the banking system and finding ways to support struggling regional banks.
The Federal Reserve and other regulators are closely monitoring the situation and taking steps to address potential risks.
But it will likely take time for the markets to stabilize and for investors to regain confidence in the industry.
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