(News Bulletin 247) – The Californian bank PacWest plunges into the first exchanges on Wall Street, after announcing that its deposits had fallen further last week.
US regional bank PacWest plunged again on Wall Street on Thursday after reporting that many customers withdrew deposits in early May and that it had arranged to be able to borrow more from the central bank.
Its title fell by more than 20% at the opening of the New York Stock Exchange. It has already lost more than 80% since March 8, the start of a banking crisis that has shaken the world of finance for two months.
The new weak link
Pacific Western, or PacWest, based in Los Angeles, is the 53rd U.S. bank by asset size. It is now considered the new weak link in the system after the bankruptcies of SVB and Signature Bank in March, and the takeover by the authorities of First Republic in early May before its resale to JPMorgan Chase.
PacWest had already been rocked on Wall Street when it said on May 3, two days after the fall of First Republic, that it was considering “all strategic options.”
The message was intended to be reassuring, PacWest indicating that it had not recorded any exceptional withdrawals. But in a stock market document on Thursday, PacWest acknowledged that “this information (had) reinforced the fears of (its) customers about the security of their deposits”.
Result: In the week ending May 5, 2023, his deposits were down about 9.5%, with most of that drop occurring on May 4 and May 5.
The bank had already seen its deposits melt by 17% in the first quarter. “These recent events, and the media coverage to which they are subject, have increased certain risks and uncertainties relating to our business and our future prospects,” wrote the bank.
It also indicated in the same document that it had provided a portfolio of loans totaling $5.1 billion as collateral with the US Federal Reserve (Fed) in order to be able to increase its borrowing capacity with of the institution of 3.9 billion dollars. PacWest now says it has $15 billion in readily available cash.
(With AFP)
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