Shares in several US regional banks tumbled in after-hours trading on May 3, even after Federal Reserve Chairman Jerome Powell called the banking sector "solid" and "resilient" just hours earlier.
Regional lenders including PacWest Bancorp plunged 52.5% in after-hours trading after Bloomberg reported the bank would explore strategic options on May 4. Some see it as another bank that could fail in the US banking crisis. The bank is reportedly considering a sale or financing , Bloomberg reported, citing people familiar with the matter. Meanwhile, Western Alliance Bancorp (22.4%), Metropolitan Bank (16.2%) and HomeStreet (7.8%) were the other hardest-hit regional banks.
Metropolitan Bank, which used to service cryptocurrency firms, shut down its digital assets vertical in January because it was unhappy with the way the cryptocurrency industry was developing. Western Alliance Bancorp has also integrated blockchain-based payment solution s for the client base of the company's blockchain and digital assets arm. Powell tried to calm concerns about the banking sector as he announced that the Fed will raise interest rates by 25 basis points: “Conditions in the [banking] sector have generally improved since early March, and the US banking system is sound and resilient. We will continue to monitor conditions in the sector.”
Powell added that the Fed is "committed to learning the right lessons from this event, and we will work to prevent it from happening again." The collapse of First Republic Bank was the second largest bank to fail recently. Problems first arose on April 26 , when news of a government takeover broke, sending the bank's shares plunging 20% in a matter of hours.
Some on Crypto Twitter mocked Powell for saying that conditions in the banking sector "have generally improved" since early March. Will Clemente, founder of digital asset analytics firm Reflexivity Research, tweeted to his 680,300 Twitter followers that five banks SVB, Silvergate, Signature, First Republic and PacWest The collapse "sounds like a very sound and resilient banking system..." Twitter user Zerohedge poked fun at Powell by pointing out to his 1.6 million followers that more than $500 billion has been lost in "bank failures" in the past month alone.
A 52% drop in PacWest Bancorp would wipe about $340 million off its market value, which closed at $772 million on May 3, according to Google Finance.
