PacWest tumbles on deposit drop, asset pledge
PacWest Bancorp (PACW.O) said on Thursday deposits declined last week and the bank pledged more assets as collateral to the U.S. Federal Reserve to increase its borrowing capacity, sending shares tumbling 20% in premarket trading.
The slump dragged down other regional banks, with shares of Western Alliance Bancorp (WAL.N), KeyCorp (KEY.N) and Zions Bancorp (ZION.O) down between 2.4% and 8%.
PacWest pledged an additional $5.1 billion of its loans to the central bank on Wednesday, which the lender said resulted in an additional borrowing capacity of $3.9 billion.
“We pledged additional assets as collateral for borrowings to increase our liquidity position for potential deposit outflows,” PacWest said in a filing.
During the week ended May 5, deposits declined about 9.5%, the bank said, adding the majority of those outflows happened on May 4 and May 5 after news reports said PacWest was exploring options.
The $15 billion immediately available liquidity is more than enough to cover the $5.2 billion of uninsured deposits at the Los Angeles, California-based bank said.
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