Share prices of several United States regional banks tanked in after-hours trading Wednesday, despite Federal Reserve Chairman Jerome Powell calling the banking sector “sound” and “resilient” just hours before.
One such regional bank, PacWest Bancorp, fell a whopping 52.5% in after-hours trading after Bloomberg reported that the bank would explore strategic options on May 4. It has been seen by some as another bank to potentially fall amid a U.S. banking crisis.
The bank is reportedly considering a sale or capital raising, Bloomberg said, citing people familiar with the matter.
The share price of PacWest fell over 50% after hours on Wednesday. Source: Google Finance
Meanwhile, Western Alliance Bancorp (22.4%), Metropolitan Bank (16.2%) and HomeStreet (7.8%) were among the other hardest-hit regional banks.
Metropolitan Bank once offered services to crypto firms but closed its digital asset vertical in January because the firm wasn’t content with how the cryptocurrency industry was developing.
Western Alliance Bancorp also integrated blockchain-based payment solutions for its client base from the firm’s blockchain and digital asset branch.
Crypto gaining momentum as US Regional Bank stocks tumble after hours:
PacWest, $PACW: ⬇️60%
Western Alliance, $WAL: ⬇️30%
Metropolitan Bank, $MCB: ⬇️20%
Valley National, $VLY: ⬇️15%
HomeStreet, $HMST: ⬇️11%
Zions Bank, $ZION: ⬇️10%
KeyCorp, $KEY: ⬇️8%
Seems like time to #HODL
— Acquire.Fi (@Acquire_Fi) May 4, 2023
Powell’s attempt to quell concerns about the banking sector came as he announced that the Federal Reserve would hike interest rates another 25 base points:
“Conditions in [the banking] sector have broadly improved since early March and the U.S. banking system is sound and resilient. We will continue to monitor conditions in the sector.
Powell added they are “committed to learning the right lessons from this episode,” and we’ll work to prevent events like these from happening again.”
First Republic Bank’s collapse was the second biggest bank failure of late, which first surfaced on April 26 when the news about a government receivership broke out, causing the bank’s share price to plummet 20% in hours.
Several members on Crypto Twitter have mocked Powell for stating that conditions in the banking sector “have broadly improved” since early March.
Related: The Fed has little ammo left as $30K Bitcoin price becomes key battle line
Will Clemente, the founder of digital asset analysis firm Reflexivity Research, mocked Powell to his 680,300 Twitter followers by stating the collapse of now five banks — SVB, Silvergate, Signature, First Republic and PacWest — “sounds like a very sound and resilient banking system…”
FED Chair Jerome Powell says “banking system is sound, resilient.”
*two hours later* : PacWest, Western Alliance, and Metropolitan bank down a combined +100%$PACW $WAL $MCB pic.twitter.com/YBPk0LtYVh
— Mohegan ₿TC (@MoheganBTC) May 3, 2023
Twitter user, “zerohedge” made fun of Powell by noting to its 1.6 million followers that over $500 billion has been wiped out from “bank failures” in the past month alone.
PacWest Bancorp’s 52% fall is set to wipe out about $340 million from its market cap, which was $772 million at Wednesday’s close, according to Google Finance.
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Source: https://cointelegraph.com/news/us-regional-bank-shares-sink-despite-fed-calling-banking-system-sound
