PacWest Bancorp shares jumped Monday morning after the regional bank announced plans to sell a $3.54 billion lender finance loan portfolio to Ares Management.
The liquidity boosting move earned PacWest a cool $2.01 billion and sent the bank’s stock nearly 10% higher to $7.93. Specifically, Ares said its alternative credit arm bought PacWest's loans with financing help from Barclays.
PacWest has been selling off a series of assets since late May, having already sold its real estate lending unit and a significant chunk of its real estate loans.
The moves allow a regional bank like PacWest to recoup capital and shore up investor confidence following the failure of fellow regionals like Silicon Valley Bank and First Republic.
Interest rates are also part of the equation as the Federal Reserve has gradually raised rates as it seeks to tame inflation. Higher rates mean a greater risk of loans turning sour for banks.
"This transaction will improve our liquidity and capital as we continue to implement our announced strategy to return our focus to relationship-based community banking," PacWest CEO Paul Taylor said in a statement.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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