(Reuters) – Shares of major US regional lenders fell on Friday, underscoring the continued uncertainty among investors about the financial stability of mid-sized banks.
Comerica Inc (CMA.N), Fifth Third Bancorp (FITB.O) and KeyCorp (KEY.N) were down 3.7%, 1.1% and about 2%, respectively. PacWest Bancorp (PACW.O), which lost 23% Thursday after reporting a drop in deposits, fell 2.7%. Shares of Zions Bancorp (ZION.O) fell 2.4%.
All three major Wall Street indices, including the S&P 500 (.SPX), were also trading lower after data showed US consumer confidence fell to its lowest level in six months.
“More US banks have been in the crosshairs…although many of the banks under stress generally have strong credit fundamentals,” DBRS Morningstar analysts said, adding that investor concerns are likely to persist until regulators extend deposit insurance or ban Investors bet on stocks. , a practice known as short selling.
Persistent investor concerns about instability in the regional banking sector, exacerbated by the collapse of First Republic Bank earlier in May, has sent the KBW Regional Banking Index (.KRX) down nearly 14% this month. The index fell about 0.5 percent on Friday.
Markets are also eyeing the debate over the US debt ceiling, as Democrats and Republicans led by President Joe Biden, who control the House of Representatives, remain at odds over raising the country’s borrowing ceiling.
The Congressional Budget Office said Friday that the United States faces a “significant risk” of defaulting on its obligations during the first two weeks of June without increasing the debt ceiling, stressing the urgency of resolving the crisis.
U.S. Treasury Secretary Janet Yellen will discuss the impasse next week with members of the Bank Policy Institute’s board of directors – which includes JPMorgan Chase & CEO Jamie Dimon and Citigroup CEO Jane Fraser, a Treasury official told Reuters.
“Markets will focus on banking concerns, debt ceiling concerns,” TD Securities analysts wrote in a note to investors, among other economic indicators.
The Federal Deposit Insurance Corporation said Thursday it would revamp its deposit insurance fund by charging a special assessment fee of 0.125% on uninsured deposits from lenders of more than $5 billion, though analysts said the tax should not be A concern for the banks.
“While the private valuation is meaningful in terms of dollars overall for the industry, it is not meaningful on a per-bank basis,” Raymond James analysts wrote in a note.
On the upside, shares of Charles Schwab (SCHW.N) traded 2.5% higher after the brokerage said that so far in May, it has seen fewer clients move money away from its accounts and into other higher-yielding products. She added that the pace of “cash redistribution” slowed down for three consecutive months and will slow down during 2023.
Additional reporting by Nikit Nishant in Bengaluru; Editing by Devika Siamnath
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