Regional bank stocks rebounded Tuesday as some investors were banking that contagion risks have been contained following the closure of Silicon Valley Bank and Signature Bank.
On Sunday, US regulators said they created a plan to backstop all depositors in the two banks.
First Republic Bank shares soared more than 60% Tuesday morning, after plummeting 62% yesterday, even as the bank’s credit rating from S&P Global was placed on CreditWatch with negative implications.
Western Alliance Bancorporation stock also advanced sharply, surging more than 40% after CNBC reported that billionaire investor Ken Griffin’s hedge fund Citadel had taken a 5.3% stake in the bank.
On Monday, Western Alliance announced that it saw only “moderate” outflows, and revealed it has taken further steps to strengthen its liquidity position.
Also on Monday, the Federal Reserve said it would conduct a review of the fallout of Silicon Valley Bank, with the results being released publicly by May 1, 2023.
The review will be led by Michael Barr, the Fed vice chair for supervision.
Contact Sean at sean@proactiveinvestors.com