PacWest, Western Alliance lead rebound in US regional lenders

A general view of Pacific Western Bank in Huntington BeachA general view of Pacific Western Bank in Huntington Beach, California, U.S., March 22, 2023. REUTERS/Mike Blake/

May 18 (Reuters) – Battered shares of PacWest Bancorp and Western Alliance Bancorp edged higher in premarket trading on Thursday as the U.S. midsize lenders looked to sustain a recent rebound booked on bets that the worst of the regional banking turmoil was over.

PacWest Bancorp (PACW.O), which is currently exploring strategic options, climbed 7.9% and was set to build on a 22% gain recorded for the week till Wednesday.

Shares of Western Alliance (WAL.N) climbed 4.2%, also poised to extend their near 27% surge this week after the Phoenix-based lender reported strong deposit growth in an attempt to reassure investors of its financial health after three regional banks failed in recent months.

After a bruising selloff, U.S. regional banks have found some reprieve this week thanks to favorable brokerage actions following Western Alliance's deposit disclosure, along with hopes that Washington will reach a deal to raise the U.S. debt ceiling.

Fund managers and billionaire investors have also doubled down on mid-sized lenders, hoping to buy the dip.

The KBW Regional Banking Index (.KRX) jumped 7.2% on Wednesday, recording its biggest percentage gain in nearly two years. The index has risen nearly 11% from a 2-1/2-year low hit earlier this month.

Among other movers on Thursday, Zion Bancorp (ZION.O) climbed 1.3% and First Horizon (FHN.N) added 2.4%.

Meanwhile, Charles Schwab Corp (SCHW.N) edged about 1% lower after the financial services firm said it was looking to raise $2.5 billion in debt.

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