PacWest Bancorp, the embattled US lender, saw a big jump in its stock price after drastically reducing its quarterly dividend.
The move to pay a dividend of $0.01 per common share, compared with its usual payout of $0.25 cents, was aimed at bolstering its financial position in the face of economic uncertainty and industry volatility, the bank said in a statement.
PacWest shares, which had surged by nearly 82% in the previous trading session, traded around $6.86 on Monday morning, signaling an impressive rebound.
PacWest had faced significant setbacks last week when it announced recently it was exploring strategic options, including a potential sale or capital raise, leading to a record low for the bank's stock.
“Given current economic uncertainty, recent volatility in the banking sector and potential changes in regulatory capital requirements, we view reducing the dividend as a prudent step to accelerate our plans to build capital to CET1 of 10%+,” CEO Paul Taylor said in a statement.
Investors cautiously tiptoed back into the US regional banking sector, resulting in sharp gains for peers such as Western Alliance Bancorp, Comerica (NYSE:CMA) Inc, Zions Bancorp, and Keycorp. First Horizon Corp experienced a modest 2% increase.
The recent collapse of three US lenders within a two-month period sent shockwaves throughout the sector, prompting investors to offload shares even in financially sound banks.
The KBW Regional Banking index lost around 0.7% on Monday morning.
--Updates with share price movement--
Contact Angela at angela@proactiveinvestors.com
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