(Reuters) – U.S. bank PacWest said on Thursday that its deposits had fallen last week and that it had pledged more assets to the Federal Reserve (Fed) to boost its borrowing capacity, sending its share price plummeting 28.78% in early trading on Wall Street.
In its wake, Citizens Financial, KeyCorp, Comerica, Zions and Western Alliance Bancorp fell from 1.89% to 3.43%. The S&P index of banks dropped 1.74%.
PacWest saw its deposits decline about 9.5% in the week to May 5, the bank said, adding that the majority of these outflows occurred after news reports that the bank was considering strategic options. .
The bank also indicated that it was able to offset these withdrawals with the cash it had.
“We have contributed additional assets as collateral for borrowings, to increase our liquidity position for potential cash outflows (by customers),” PacWest added in a filing.
“The fact that PacWest has to continue to reassure the market is a negative…Investors have seen banks in the past constantly forced to make statements to boost confidence, suggesting that there are issues facing them. compel them to do so,” said Rick Meckler, partner at Cherry Lane Investments.
Concerns about the stability of intermediary banks have deepened in recent days, with investors sanctioning even seemingly solid establishments.
Since the beginning, PacWest has lost nearly 40% on the stock market. Its title fell to its lowest level on Thursday after the announcement of a possible sale of strategic assets.
(Niket Nishant, with Shristi A Achar in Bangalore, written by Noor Zainab Hussain, Laetitia Volga, edited by Jean-Stéphane Brosse)
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