The stock price of PacWest Bank, the leading financial institution headquartered in California with over $40 billion in assets, fell today by a staggering 30% before trading was briefly halted on Thursday. 

PacWest Faces $1.5B in Withdrawals

The fall was due to a recent report from the regional bank indicating that customers had withdrawn about 9.5% or $1.5 billion of its total deposits, causing concerns about the bank’s financial stability. The news casted doubts on the future prospects of the regional bank, which had long been viewed as a reputable player in the banking sector. 

Following the collapse of First Republic Bank last week, uninsured deposit withdrawals surged at PacWest, leading the bank to pledge $5.1 billion of its assets as collateral to support its liquidity position, as stated in a regulatory filing released on Thursday.

The update was a drastic contrast from the statement released a week ago, where the bank assured its investors that it had not faced any “out-of-the-ordinary” withdrawals, highlighting the impact of the First Republic Bank’s collapse on the overall banking sector and the need for banks to adapt to the changing market conditions. 

Shares of PacWest have now lost close to 40% this month and recorded an all-time low last week. According to data from analytics firm Ortex, short sellers have profited $123.76 million by placing bets against PacWest.

Banks Are Not Immune to Failure

The recent massive drop experienced in the stock price of PacWest Bank has highlighted the potential for more bank failures despite banks being regarded as highly stable, unlike most crypto firms that are typically negatively portrayed in the media.

While the crypto sector is known for its high volatility and frequent asset price fluctuations, reports suggest that a number of both crypto firms and banks have failed in recent times. Thus, portraying crypto as the culprit for financial failures is not necessarily fair, given that failures could occur in any sector.

In conclusion, the recent incident highlights the need for strong and effective banking regulations that serve to protect consumer interests and guarantee the continued stability of the financial system. It also emphasizes the point that banks are not immune to failures.

The post Another Bank Run? PacWest Bank Drops 30% As Customers Pull Deposits appeared first on Coinfomania.