May 15 (Reuters) - Shares of U.S. regional lenders gained on Monday led by a rebound in PacWest Bancorp (PACW.O), as investors tried to look past the crisis of confidence brought on by the collapse of three banks in a span of two months.
PacWest rose 8.4%, while Western Alliance Bancorp (WAL.N), Fifth Third Bancorp (FITB.O), Comerica Inc (CMA.N) and KeyCorp (KEY.N) were up between 2% and 6%. The KBW Regional Banking Index (.KRX), which had lost 13.7% so far this month, rose 2%.
The struggles for the sector began in March when Silicon Valley Bank folded up followed by Signature Bank in rapid succession. Then in May First Republic collapsed, creating a vicious cycle that put pressure on regulators to intervene.
However, investors have remained wary of any reassurances from analysts and regulators on the stability of the regional banks despite deposits rising.
The latest was from Treasury Secretary Janet Yellen, who said on Saturday that nearly all banks had access to sufficient liquidity, but warned that pressure on profit may lead to some midsize deals.
"We have yet to see any major spillover effects on the broader economy... and remain optimistic the risks are isolated, not systemic," Raymond James Chief Investment Officer Larry Adam wrote in a note to clients.
Deposits at U.S. banks climbed to $17.16 trillion in the week ended May 3, up about $67 billion to mark the first increase in four weeks, the Fed's weekly snapshot of the banking system's assets and liabilities showed on Friday.
