off-the-wire

Treasury: US banks have 'substantial' liquidity, deposit flows are stable

Kitco Media
By Reuters
Published:
Updated:
Reuters

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."

Shares of Los Angeles-based PacWest were down 60% after the lender confirmed it was exploring strategic options. 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.

Experts say the share price moves do not reflect the banks' fundamentals and are likely a result of short-selling activity following the collapse of First Republic Bank and its sale to JPMorgan Chase & CO (JPM.N) on Monday.

First Republic was the third major casualty of the biggest crisis to hit the U.S. banking sector since 2008.

Reporting by Andrea Shalal
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.