Western Alliance WAL.N is exploring strategic options including a potential sale of all or part of its business, the Financial Times reported on Thursday citing two people briefed on the matter.
According to Nasdaq, The Arizona-based bank has hired advisers to explore its options, the report added, saying the bank’s deliberations were at an early stage and might not come to anything.
Shares in Western Alliance had fallen 45% in volatile trading before being halted. The stock has shed more than 60% of its value so far this year.
Three U.S. regional banks have failed in the last two months, spurring widespread worries about the sector’s stability and deepened concerns about lenders as nervous clients moved their money to bigger financial institutions. PacWest Bancorp PACW.Oalso said late on Wednesday it was in talks with potential partners and investors about strategic options.
Federal Reserve chair Jay Powell yesterday said that the U.S. banking system is “sound and resilient.” It was akin to a sports team owner giving the coach a vote of confidence. If you’re compelled to say it, things really aren’t going well.
PacWest reportedly is exploring strategic options, including a possible sale, acknowledging “discussions are ongoing” with “several potential partners and investors.”
According to Axios, Shares in the Los Angeles-based lender were down 71% on the year as of yesterday’s market close and got further routed at today’s open. Phoenix-based Western Alliance also is seeking help, per an FT report that sent its shares tumbling even further.
Western Alliance is denying the FT report, adding that it has not hired advisors. Trading of its shares has been halted multiple times]. The FDIC isn’t involved in either situation. At least not yet.
Remember, both Silicon Valley Bank and the First Republic also at first sought private market solutions. Several other regional banks are also under stock price pressure, including Comerica and Zions Bancorp.
What to know, per Axios’ Felix Salmon: If there’s a change of control (e.g., a sale) then all of a bank’s loans must get marked to market. So, instead, the banks are looking for minority investments or other solutions that allow them to keep their loans booked at par.
