SPDR Regional Banking ETF (KRE) advanced as much as 2.1% on Monday, after dropping 14% last week, following the news of a Swiss government-engineered takeover of troubled lender Credit Suisse by UBS.
Leading the advance was PacWest Bancorp shares, which climbed 10% to $10.17, while shares of First Citizens BancShares Inc also jumped 10% to $559.30, and BankUnited (NYSE:BKU) Inc stock rose 7% to $22.74.
Other notable gainers included shares of Zions Bancorp NA, which moved up 1.6% to $30.41, as well as a nearly 2% increase in the price of KeyCorp (NYSE:KEY) shares to $11.75.
First Republic Bank stock, however, continued to drop, down 45% to $12.58 after credit rating agency S&P tagged the bank with a significant downgrade over the weekend, dropping the regional bank from a B+ to a BB- rating (a three-step downgrade) and said that additional downgrades were not out of the question.
First Republic Bank shares have lost about 90% in value during the past 10 trading sessions.
On Sunday, UBS agreed to buy Credit Suisse for 3 billion Swiss francs, or US$3.2 billion.
Shortly thereafter, the US Federal Reserve announced a joint liquidity operation with a group of central banks — including the Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank — in order to increase the frequency of their US dollar swap line arrangements from weekly to daily, as reported by CNBC.
Contact Sean at sean@proactiveinvestors.com