Bank stocks continue to fall following First Republic demise

While regulators are still dealing with the aftermath of the recent failure of First Republic Bank, investors on Wall Street have already shifted their attention to speculating about which bank might be the next to face a similar fate.

On Tuesday, bank stocks experienced significant declines, particularly smaller banks that have substantial exposure to uninsured deposits, the Associated Press reports.

Institutions like Western Alliance Bank, PacWest Bancorp, Comerica, and Zions Bank saw their share prices plummet.

Western Alliance’s stocks dropped by 19% during midday trading, while PacWest fell by 26%. Trading for both stocks was temporarily halted due to high levels of volatility.

This decline in bank stocks marks the second consecutive day of such losses, as reported by the AP.

The downward trend follows the recent closure of First Republic Bank by regulators, with the majority of its operations being sold in a rapid sale to JPMorgan Chase.

The collapse of First Republic Bank was the second-largest bank failure in U.S. history, and it came on the heels of the failures of Silicon Valley Bank and Signature Bank within the past six weeks.

While JPMorgan CEO Jamie Dimon expressed confidence that the crisis in the banking sector is subsiding with the acquisition of First Republic, the resolution of that particular ordeal does not resolve all the challenges faced by other banks.

Written by staff