The PacWest Bancorp (NASDAQ: PACW) stock price plunged 45.48% as its future hangs in the balance following the drop in its stock price amid concerns about its future. The regional bank, with branches in California, Dever Colorado, and Durham, North Carolina, looks set to fail as its stock price plunges.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.
Most investors were hopeful that the collapse of First Republic Bank over the weekend would mark the end of the US banking crisis. However, PacWest is also headed towards liquidation and a possible sale if it cannot stem the decline in its share price, which is highly unlikely.
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YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY
Once a bank loses the confidence of its customers and investors, it is only a matter of time before there is a bank run where customers rush to withdraw their funds from the bank before it collapses.
PacWest received a cash infusion of $1.4 billion from Atlas SP Partners on March 2022 via an asset-backed financing facility, but more was needed to stem the decline in its stock price, which has fallen 77.91% in the past three months.
The regional bank has expressed its desire to avoid being taken over by regulators, but this decision may not be its call if things keep worsening. The Federal Deposit Insurance Corporation (FDIC) may have to step in if PACW stock keeps falling.
The decline in PacWest stock could trigger a rush of withdrawals from customers, which by now is almost inevitable, which means that the bank’s future is almost sealed. The bank has said it is considering all options, including a potential takeover.
PacWest said in a statement: “In accordance with normal practices, the company and its board of directors continuously review strategic options. Recently, the company has been approached by several potential partners and investors — discussions are ongoing. The company will continue to evaluate all options to maximise shareholder value.”
According to Bloomberg, sources familiar with the bank’s operations confirmed that it had been trying to sell itself, but potential bidders were not lining up as fast as needed to take over the firm. The bank had also considered splitting its operations or raising cash.
*This is not investment advice.
PacWest Bancorp stock price.
PacWest Bancorp stock plunged 45.48% to trade at $3.50, from Wednesday’s closing price of $6.42.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.