PacWest lifts bank stocks as it raises more cash from loan sale
By Steve Gelsi
Truist analyst says PacWest's deal to sell its loan portfolio is a sign that other banks could also raise cash to strengthen balance sheets
A fresh cash infusion from the sale of loans by hard-hit bank stock PacWest Bancorp lifted the financial sector on Monday.
PacWest Bancorp (PACW) led gains among bank stocks with a rise of 7% as it said it had generated about $2 billion in cash after Ares Management Corp. (ARES) closed its acquisition of a loan portfolio.
Truist analyst Brandon King said the deal is a positive sign for bank stocks overall.
"We think other banks facing liquidity and capital issues may be more inclined to pursue loan sales given the appetite from non-bank lenders at non-haircuts," King said in a research note.
PacWest stock is up 4.4%, while the KBW Nasdaq Bank Index is ahead by 0.6%, the SPDR S&P Bank exchange-traded fund (KBE) is up by 1.2%, the Financial Select SPDR ETF (XLF) is down 0.2% as some larger bank stocks moved down, and the SPDR S&P Regional Banking ETF (KRE) is up by 1.5%.
Among other bank names, Comerica Inc. (CMA) is up 1.6%, East West Bancorp. Inc. (EWBC) and First Horizon Corp. (FHN) are both up 1.8% and Zions Bancorp (ZION) is up 1.7%.
Metropolitan Bank Holding Corp. (MCB) is up by 4.4%, Prosperity Bancshares Inc. (PB) is up by 1.5%, Citizens Financial Group Inc. (CFG) is ahead by 0.8% and Western Alliance Bancorp. (WAL) is up by 3.5%.
Most of the gains in banking were in regional banks, as the megabank stocks were mixed. Goldman Sachs Group Inc. (GS) and Wells Fargo & Co. (WFC) both dropped about 0.2%, while Bank of America Corp. (BAC) rose 0.9% and JPMorgan Chase & Co. (JPM) retreated by 0.7%.
While many regional-bank stocks are getting a lift, Wall Street is also waiting to see the results of the Federal Reserve's bank stress tests on Wednesday.
Also read: Fed official eyes 'reverse stress tests' for banks as results awaited after 2023 bank failures
-Steve Gelsi
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
06-26-23 1102ET
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