People walk near a First Republic Bank branch on March 16, 2023 in New York City.
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Regional bank stocks moved sharply higher in premarket trading on Monday as investors were encouraged by reports that the recent strain on the sector could be easing and that additional government support could be on the way.
Shares of First Republic jumped by 25% in premarket trading, chipping away at the struggling firm’s steep losses in March. Shares of PacWest Bancorp rose about 11%, while Western Alliance gained over 6%.
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The SPDR S&P Regional Bank ETF (KRE) jumped more than 3%.
Regional bank stocks climbed on Monday.
The Monday moves follow several signs that the crisis for regional banks could be easing in the United States.
Bloomberg News reported on Saturday that U.S. officials are considering expanding the federal programs that provide more liquidity to banks, in part to help First Republic while it searches for a buyer.
Also CNBC reported on Saturday that the deposit inflows into large banks from the smaller regionals has slowed substantially.
Regional bank stocks have been under significant pressure this month, with regulators closing SVB on March 10 and Signature Bank two days later following significant deposit outflows. Federal regulators announced that depositors at those two banks would be made whole while providing additional liquidity to other banks.
First Republic, which had a similar business model to SVB, has been a particular point of concern. Eleven larger banks deposited $30 billion into First Republic as a show of confidence in the smaller firm.
Monday’s gains also follow the announcement that First Citizens BancShares agreed to buy a large chunk of SVB, including its deposits and branches. Shares of First Citizens jumped 40% in premarket trading.
Parts of the smaller Signature Bank have already been purchased by New York Community Bancorp. And in Europe, Swiss officials brokered a sale of Credit Suisse to UBS, though Credit Suisse’s issues appear to be largely unrelated to the U.S. regionals.
