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☆ Stock Market Today: Dow Slips 300 Points on Bank Jitters; Fed Decision Weighs on Traders
▼ + stars: | 2023-05-04 | by ( ) www.wsj.com time to read: +2 min

As stock indexes slipped Thursday, PacWest's already battered shares fell by 52% in morning trading. The bank said it was talking to potential partners and investors, and would keep evaluating "all options to maximize shareholder value." Stock indexes fell ahead of a big earnings day, with Apple and other big companies on tap. The jitters follow the failures of Silicon Valley Bank, Signature Bank and, more recently, First Republic Bank. "The cumulative effect of these bank failures will take its toll both on financial-market conditions and prompt nervousness among the investment community," said Brian O’Reilly, head of market strategy at Mediolanum International Funds.

☆ First Horizon stock tumbles 50% after TD Bank merger collapses
▼ + stars: | 2023-05-04 | by ( David Goldman | ) edition.cnn.com time to read: +3 min

New York CNN —First Horizon and TD Bank have called off a $13 billion deal that would have formed America’s sixth-largest bank, adding to the turmoil sweeping the country’s regional lenders. But regional banks have been losing the confidence of investors and customers since the March collapse of Silicon Valley Bank and Signature Bank. On Monday, a third regional bank, First Republic, failed and JPMorgan purchased most of its assets. Other regional bank stocks have tumbled in recent days after First Republic’s failure. Customers had been moving their money to bigger banks, leaving some regional banks without the cash they need to pay for withdrawals.

☆ PacWest is the latest bank whose future is in question after reports it's weighing a sale sent shares tumbling over 50%
▼ + stars: | 2023-05-04 | by ( Huileng Tan | ) www.businessinsider.com time to read: +2 min

The news sent PacWest's share price down 52.5% to $3.05 apiece in after-hours trade on Wednesday. PacWest Bancorp is the latest regional bank to be hit by uncertainty following media reports it is considering a range of strategic options — including a sale. Wednesday's rout in PacWest shares marked its fifth straight day of stock price slide. The shares had plunged by 26% on Tuesday amid a broad sell-off in regional bank stocks, two days after First Republic Bank failed and was taken over by the Federal Deposit Insurance Corporation. PacWest shares closed 2% lower at $6.42 apiece on Wednesday and are down 72% so far this year.

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☆ Western Alliance shares see wild swings as the bank denies report of possible sale that sparked 62% plunge
▼ + stars: | 2023-05-04 | by ( Matthew Fox | ) www.businessinsider.com time to read: +3 min

Western Alliance Bank plunged as much as 62% on Thursday after the FT reported that the bank was exploring a potential sale. Western Alliance denied the report and said no sale was under consideration, helping the stock pare its losses to 32%. Regional banks have been embroiled in an ongoing crisis after the collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank. Western Alliance Bank was swift to deny the report, helping its stock rebound and pare losses to 32%. But Western Alliance Bank said in a statement that the FT story is "categorically false."

☆ Stock Market Today: Dow Drops More Than 350 Points on Bank Jitters, Fed Rate Hike
▼ + stars: | 2023-05-04 | by ( ) www.wsj.com time to read: +2 min

The bank said it was talking to potential partners and investors, and would keep evaluating "all options to maximize shareholder value." The S&P 500 dropped 0.7%, while the Dow Jones Industrial Average slid 1.1% and the Nasdaq Composite gave up 0.3%. Western Alliance Bancorp was down 39% after the company denied a report that it was exploring strategic options, including a potential sale. First Horizon sank by 37% after its $13.4 billion sale to Toronto's TD Bank was called off. The jitters follow the failures of Silicon Valley Bank, Signature Bank and, more recently, First Republic Bank.

☆ There are limited options to fix the banking crisis, but one is gaining support
▼ + stars: | 2023-05-04 | by ( Jeff Cox | ) www.cnbc.com time to read: +4 min

Ackman didn't provide specifics on how he thinks a deposit guarantee program would work, but he said one is essential to restore investor confidence in regional banks. That has put pressure on midsize banks, and the S & P Regional Bank ETF has fallen 40% year to date. Short sellers have ganged up on some regional banks on the prospect that even those that are rescued or merged will see stock holders wiped out. "Renewed stress among regional bank stocks after market close may cause [Washington, D.C.] to reconsider priorities," Mayo said in a client note. "Unfortunately, there is a significant disconnect between the renewed pressure on regional banks and DC's posture," Mills said in a note.

A cluster of regional banks scrambled on Thursday to convince the public of their financial soundness, even as their stock prices plunged and investors took bets on which might be the next to fall. PacWest and Western Alliance were in the eye of the storm, despite the companies’ protestations that their finances were solid. PacWest’s shares lost 50 percent of their value on Thursday and Western Alliance fell 38 percent. They are also much smaller than Silicon Valley Bank and First Republic, which each had about $200 billion in assets when they collapsed. PacWest, based in Los Angeles, has about $40 billion in assets, and Western Alliance, with headquarters in Phoenix, has $65 billion in assets.

☆ Western Alliance denies ‘shameful’ report it’s the next bank for sale
▼ + stars: | 2023-05-04 | by ( Krystal Hur | ) edition.cnn.com time to read: +2 min

New York CNN —Western Alliance Bank denied reports that it’s exploring a sale or has hired an advisor to explore strategic options. Shares of the regional bank tumbled 36% Thursday, slightly paring back its losses after plunging over 50% at one point on reports that the company is the regional bank latest to explore a potential sale. The Financial Times, citing two anonymous sources, reported Thursday that the Arizona-based bank is exploring strategic options. “This story is absolutely false, there is no truth to this,” a Western Alliance spokesperson told CNN in an email. Western Alliance is not exploring a sale, nor has it hired an advisor to explore strategic option.

First Horizon and TD said in a statement they had mutually decided to end the deal because there was no clarity on when they would get regulatory approvals. TD will pay $200 million to First Horizon, in addition to a $25 million fee reimbursement. 2 lender came under pressure from some investors to scrap the purchase after the U.S. regional banking crisis. TD agreed to buy First Horizon in February last year to expand its presence in the United States. Average deposits at First Horizon fell 4% to $62.2 billion in the first quarter, compared to the end of last year.

☆ Billionaire investor Bill Ackman warns more banks will fail unless the FDIC insures all deposits
▼ + stars: | 2023-05-04 | by ( George Glover | ) www.businessinsider.com time to read: +2 min

All US regional banks will be under threat unless regulators move to insure all deposits, according to Bill Ackman. "The FDIC's failure to update and expand its insurance regime has hammered more nails in the coffin," he said Wednesday. "The FDIC's failure to update and expand its insurance regime has hammered more nails in the coffin," Ackman said on Twitter Wednesday. Recent turmoil has fueled hundreds of billions of dollars worth of outflows from regional banks to larger institutions, as well as money-market funds. First Republic "would not have failed if the FDIC temporarily guaranteed deposits while a new guarantee regime were created," Ackman said.

☆ Banking crisis: Why markets are still freaking out about banks
▼ + stars: | 2023-05-04 | by ( Allison Morrow | ) edition.cnn.com time to read: +6 min

Similarly, southeastern regional bank First Horizon was teetering, having scrapped a $13 billion merger with Canada’s TD bank. That market pessimism was echoed by Bill Ackman, the billionaire investor, who tweeted Thursday that regional banks broadly are in trouble. Without a miracle from DC, the outlook for regional banks is not great. There is so much pessimism percolating on Wall Street, smaller banks are going to get crushed. That means we can expect more bank failures, and more Wall Street panic, in the weeks and months ahead.

☆ Americans haven't been this worried about their bank deposits since the 2008 financial crisis
▼ + stars: | 2023-05-04 | by ( Christina Cheddar Berk | ) www.cnbc.com time to read: +1 min

Recent events may be chipping away at confidence in the U.S. financial system, according to the findings of a Gallup survey. Nearly half of the 1,013 adults polled said they were "very worried" (19%) or "moderately worried" (29%) about the safety of the money they had tucked away in a bank or other financial institution, Gallup said. The level of concern expressed in the poll is similar to the findings that Gallup found shortly after the collapse of Lehman Brothers in September, 2008. Still, a December 2008 reading had shown sentiment had already improved from those worst levels as steps were taken to ease the impact of the financial crisis. When the poll was conducted from April 3-25 this year, Signature Bank and Silicon Valley Bank had already failed.

☆ Futures waver as PacWest slide offsets Fed pause optimism
▼ + stars: | 2023-05-04 | by ( ) www.reuters.com time to read: +3 min

The Fed over the past 14 months has raised rates by 500 basis points to tame price pressures in its most aggressive policy tightening since the 1980s. The KBW Regional Banking index (.KRX) and S&P 500 Banks index (.SPXBK) have lost around 29% and 15% so far in 2023. Investors will also monitor weekly jobless claims for further clues on the state of the labor market. Qualcomm Inc (QCOM.O) slumped 6.7% after third-quarter forecasts missed estimates, while Etsy Inc (ETSY.O) gained 3% on beating expectations for quarterly revenue. Reporting by Ankika Biswas in Bengaluru; Editing by Shounak DasguptaOur Standards: The Thomson Reuters Trust Principles.

☆ Opinion | First Silicon Valley Bank, Now First Republic. How Worried Should We Be About a Financial Crisis?
▼ + stars: | 2023-05-04 | by ( Amit Seru | ) www.nytimes.com time to read: +2 min

Just in the past few months, Silicon Valley Bank, Signature Bank and First Republic Bank have failed. Rapidly rising interest rates create perilous conditions for banks because of a basic principle: The longer the duration of an investment, the more sensitive it is to changes in interest rates. When interest rates rise, the assets that banks hold to generate a return on their investment fall in value. Thus, increases in interest rates can deplete a bank’s equity and risk leaving it with more liabilities than assets. So it’s no surprise that the U.S. banking system’s market value of assets is around $2 trillion lower than suggested by their book value.

☆ Almost 50% of Americans say they worry about their money being safe with a bank as shares of regional lenders plunge amid deposit outflows
▼ + stars: | 2023-05-04 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

Nearly half of Americans are worried about the safety of their cash in banks and other financial institutions, Gallup said Thursday. But 20% said they were "not worried at all" about their cash, and 30% considered themselves "not too worried." The study was conducted throughout April after Silicon Valley Bank and Signature Bank imploded in March. But its message didn't soothe those trading regional bank stocks on Thursday. Regional bank stocks plunged, with PacWest Bancorp sliding nearly 50% following a Bloomberg report the Beverly Hills-based lender is weighing strategic options, including a breakup or a sale to a larger rival.

☆ Fed data shows failed bank First Republic was key central bank borrower
▼ + stars: | 2023-05-04 | by ( Michael S. Derby | ) www.reuters.com time to read: +2 min

NEW YORK, May 4 (Reuters) - Federal Reserve data on Thursday showed a large part of the central bank's emergency lending activities in recent weeks were tied up with the now-shuttered First Republic Bank. The Fed reported that while overall emergency lending to banks in the latest week tipped down a bit, the composition of the lending changed in key ways. The Fed said that money the bank had borrowed via the discount window, the central bank's main source of liquidity for banks, and through the Bank Term Funding Program, had now shifted to "other credit." Condtions in the banking sector "have broadly improved since early March, and the U.S banking system is sound and resilient," Powell said. Fed lending surged in March driven by banking sector troubles and has remained at very high levels since that initial surge.

☆ Analysts warn regional banks stocks are in a 'negative feedback loop' and detached from fundamentals
▼ + stars: | 2023-05-04 | by ( Jesse Pound | In Jesse-Pound | ) www.cnbc.com time to read: +3 min

The latest drop for regional bank shares is causing some Wall Street analysts to back away from their recommendations on the stocks, even if they still believe in the underlying fundamentals for the companies. Other regional banks also sold off, including a 19% drop for Western Alliance. The deposit update was not enough to reassure all Wall Street analysts about the health of regional banks, and there is concern that the drops in the stocks could reignite deposit flight. Meanwhile, RBC Capital Markets' analyst Jon Arfstrom stuck with his outperform rating on PacWest, but said only investors with strong stomachs should stick around. Western Alliance Another bank stock that has taken heavy loses in recent weeks is Western Alliance .

☆ Stocks making the biggest moves before the bell: Paramount, PacWest, Shopify & more
▼ + stars: | 2023-05-04 | by ( Peter Schacknow | ) www.cnbc.com time to read: +2 min

Check out the companies making headlines in premarket trading. PacWest Bancorp – PacWest tumbled 37% in premarket trading after the banking company said it was considering various strategic options. Shopify – The e-commerce platform reported-better-than expected quarterly results and also announced the sale of parts of its fulfillment operation as well as its logistics division. Qualcomm – Qualcomm slumped 7.7% in premarket trading after the chipmaker issued a weaker than expected current quarter forecast, hurt by sagging smartphone sales. Qualcomm did report better than expected revenue for its latest quarter, with earnings matching Wall Street estimates.

☆ Pressure grows for US regulatory intervention as bank rout deepens
▼ + stars: | 2023-05-04 | by ( ) www.reuters.com time to read: +4 min

"Investors are clearly continuing to focus on remaining players that are deemed the weakest," wrote UBS banking analyst Erika Najarian on Thursday. The Federal Deposit Insurance Corp. did not respond to a request for comment. Critics say increasing deposit insurance could encourage risk-taking, and note regulators have fewer tools to rescue banks following the 2008 financial crisis. The latest crisis began in March when runs on Silicon Valley Bank and Signature Bank led to their abrupt closures, leading depositors to move their cash to bigger banks. To stem the contagion, regulators took emergency steps to reimburse all customers at the two banks, while the Fed offered lenders additional liquidity.

☆ Treasury: US banks have 'substantial' liquidity, deposit flows are stable
▼ + stars: | 2023-05-04 | by ( ) www.reuters.com time to read: +1 min

WASHINGTON, May 4 (Reuters) - The U.S. Treasury Department on Thursday said it was continuing to monitor market developments amid sharp drops in the shares of regional lenders PacWest Bancorp <PACW.O and Western Alliance Bancorp (WAL.N), but deposit flows were stable. "We continue to closely monitor market developments," a Treasury official said. "The banking system has substantial liquidity and deposit flows are stable." Western Alliance's stock was down 58.2%, despite a statement from the bank saying it had no unusual deposit outflows and had adequate liquidity. First Republic was the third major casualty of the biggest crisis to hit the U.S. banking sector since 2008.

☆ Big name investors like Bill Ackman are calling on the FDIC to insure all deposits, but that would only cost banks' customers more, former FDIC chair says
▼ + stars: | 2023-05-04 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

Big name investors have called for the FDIC to extend coverage to all bank deposits. But that would only cost banks' customers more, the former FDIC chair said. But extending deposit coverage won't be cheap, McWilliams said, as complicated and complex banks will incur a larger cost to insure deposits. It will be the bank, and inevitably that cost will be borne by its customers," she said. Billionaire investor Bill Ackman warned in a tweet on Wednesday that more lenders could soon fail if the FDIC didn't back all bank deposits.

☆ Apple’s balance sheet is golden and delicious
▼ + stars: | 2023-05-04 | by ( Robert Cyran | ) www.reuters.com time to read: +4 min

But for Apple (AAPL.O), the sharp change in monetary conditions is golden and delicious. The iPhone maker said on Thursday that it ended the first quarter with cash and saleable investments $57 billion greater than its debts. That’s nearly enough to cover its newly-raised dividend for a year, and $90 billion buyback program, without touching the balance sheet. While the first two initiatives sit on Goldman’s balance sheet, the buy-now-pay-later product sits on Apple’s. Apple had $57 billion more in cash and saleable securities on its balance sheet than its debts at the end of the quarter.

☆ FDIC plans to hit big banks with fees to refill deposit insurance fund - Bloomberg News
▼ + stars: | 2023-05-04 | by ( ) www.reuters.com time to read: +1 min

[1/2] A sign reads “FDIC Insured” on the door of a branch of First Republic Bank in Boston, Massachusetts, U.S., March 13, 2023. REUTERS/Brian Snyder/File PhotoMay 4 (Reuters) - The U.S. Federal Deposit Insurance Corporation is planning to exempt smaller lenders from kicking in extra money to replenish the government's bedrock deposit insurance fund, and instead saddle the biggest banks with much of the bill, Bloomberg News reported on Thursday, citing people familiar with the matter. The FDIC is planning to release a highly anticipated proposal for refilling its deposit insurance fund as soon as next week, the report added. The FDIC and its flagship deposit insurance fund have been active since the Great Depression to provide an orderly resolution for failed banks and to reimburse certain customer accounts. The regulator estimates the failure of Silicon Valley Bank will cost the deposit insurance fund $20 billion.

NEW YORK, May 4 (Reuters) - The practice of short selling is coming under increased scrutiny as shares of regional banks remain under pressure, with some calls for more regulatory oversight of the practice. Short sellers, who borrow shares they expect to fall and hope to repay the loan for less later to pocket the difference, have profited from the banking crisis. During the financial crisis, short selling was temporarily banned in the U.S., although a New York Federal Reserve review later showed the curb did not achieve the intended effect. The SEC declined to comment on Thursday when asked if it should impose a short selling ban. While some market participants criticized the practice, others, like non-profit group Better Markets, said short sellers warned markets about the challenges regional banks were facing.

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