May 3 (Reuters) - Shares of mid-sized U.S. lenders
dropped in premarket trading on Wednesday, with PacWest Bancorp and Western Alliance Bank extending sharp
losses from earlier this week as the failure of a third major
regional lender in two months continued to haunt the sector.
The regulator's seizure of First Republic Bank and
its assets sale to JPMorgan Chase & Co on Monday brought
the banking sector turmoil back to the fore and sparked a
selloff as investors fretted over the next shoe to drop.
The KBW Regional Banking Index closed at its lowest
level since December 2020 on Tuesday.
"The tide of concern is rising about the ailing health of
regional U.S. bank portfolios, with many sitting on large
unrealised losses, at a time when deposit flight is all the
rage," said Susannah Streeter, head of money and markets at
Hargreaves Lansdown.
"The ease of withdrawals in the digital age is causing
increased nervousness, given the speed of banking collapses over
the past two months."
PacWest shares declined 10.5% before the bell after closing
at a record low on Tuesday. Western Alliance Bank shed 7.2%,
while Comerica and Zions Bancorp fell 3.3% and
2.6%, respectively.
PNC Financial Services Group Inc dipped 1.8%. The
lender on Tuesday said the parent company and its banking unit
could offer up to $15 billion of its commercial paper to provide
additional liquidity.
Later in the day, the U.S. Federal Reserve is expected to
deliver a 25 basis-point interest rate hike and comment on the
recent bank failures in a stiff rate regime.
(Reporting by Medha Singh in Bengaluru; Editing by Dhanya Ann
Thoppil)
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