U.S. regional lender PacWest Bancorp (PACW) says it is considering strategic options, including a potential sale, as its share price plummets on fears of contagion in America’s financial sector.
The Beverly Hills, California-based bank says it is also considering a break-up or a capital raise as pressure mounts on small and mid-sized lenders in the U.S.
PacWest’s stock has fallen 40% in the last week and is down another 38% in premarket trading today (May 4) after JPMorgan Chase (JPM) bought regional lender First Republic Bank (FRC) after that regional lender officially failed and was taken over by regulators on May 1.
PacWest Bancorp’s stock has now lost about 85% of its market value since the beginning of March when trouble in the U.S. banking sector began.
To date, three regional U.S. banks have collapsed, including Silicon Valley Bank and Signature Bank. In Europe, Credit Suisse bank failed and has been taken over by rival UBS Group (UBS).
In reporting earnings this April, PacWest said its deposits had stabilized after a rush of withdrawals in March.
However, PacWest executives also said that they are exploring the sale of their lender finance business to free up capital, comments that worried clients and investors.
PacWest currently has 70 branches, mostly in California, and about $44 billion U.S. in assets.
U.S. bank stocks have been under pressure due to the ongoing turmoil and are among the worst performing securities on American stock markets this year.
