In a significant development in the banking sector, Banc of California (NYSE:BANC) and PacWest Bancorp have announced their intention to merge, forming a new entity with assets totalling $36 billion.
The move comes in the wake of a turbulent period for regional banks, and the merger is seen by some as a strategic response to these challenges.
An additional $400 million of capital is being raised as part of the transaction, with private equity firms Warburg Pincus and Centerbridge Partners investing in new shares.
Boasting a loan portfolio of $25.3 billion, the enlarged banking group will operate from over 70 branches across California, with Banc of California CEO Jared Wolff at the helm.
The announcement has been well-received by the market, with shares in both banks experiencing significant increases. The deal is expected to be completed by early 2024, subject to regulatory approval.
The transaction is in line with Treasury Secretary Janet Yellen's earlier suggestion that more mergers among midsize U.S. banks could be necessary following a series of bank failures.