Western Alliance Bancorp goes under

The banking crisis is over, Andreas Beck said in a recent interview – but yesterday the prices of regional banks continued to fall (seen in SPDR S&P Regional Banking ETF), and today the next regional bank, Western Alliance Bancorp, was hit. Reason: Western Alliance Bancorp declines to make statements about the current size of customer deposits. The next problematic candidate in the banking crisis appears to be localized – stock Western Alliance Bancorp was down -10% before the market.

Banking Crisis: Troubled Candidate Western Alliance Bancorp – Shares Fall

The reason for the US banking crisis, which is particularly affecting regional US banks, is simple: customers are withdrawing money because US money market funds have much higher interest rates than banks. This creates an imbalance between the deposits of the bank’s customers and the funds invested by the bank, for example, in government bonds. So banks should either liquidate or “cash out” such assets as government bonds. Or these banks lend fresh dollars to FHLB or in the Fed (via Break window) to replace the client’s capital outflow – however, these dollars carry high interest rates (currently around 4.5%).

Concerns about the development of deposits caused a drop in the price of shares of the American financial group Western Alliance Bancorp on Wednesday. Shares in the holding company fell by double digits in early trading in New York after the bank holding company presented the numbers as usual without going into the amount of assets. This is now reported by Bloomberg.

“Investors will likely conclude that management did not provide an escrow account because it would not be good news,” Jefferies Financial Group Inc.’s Casey Hare said in an analysis. “This is the fourth update since March 10 and the only one that is clearly not related to deposits.”

Deposit withdrawals contributed to the collapse of three lenders last month. Data from the Federal Reserve showed that deposits at smaller U.S. banks fell by $120 billion in the week ended March 15, while deposits at the 25 largest players rose by nearly $67 billion.

In the following week, outflows from US credit institutions generally continued, with $125.7 billion withdrawn, with small banks recording a slight increase. Many customers are also shifting their funds to more profitable alternatives, increasing pressure on regional banks.

Shares of Western Alliance Bancorp fell 6.6% in early trading in New York. At the close of trading on Tuesday, the stock was down 44% year-to-date.

A spokesman for the Western alliance did not immediately respond to a request for comment before regular business hours.


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