US bank stocks are back in the red despite Yellen’s ‘solid footing’ comments -Dlight News

US bank stocks are back in the red despite Yellen's 'solid footing' comments

US bank stocks fell into the red on Thursday as investors weighed on the future sector of First Republic Bank and Credit Suisse’s bailout provided no lift. U.S. Treasury Secretary Janet Yellen plans to tell senators today that the U.S. banking system is on solid footing and that Americans can be confident about their deposits, even as efforts to reassure investors are sidelined, according to prepared testimony for her appearance before the Senate. Finance Committee. Former Treasury Secretary Larry Summers told CNN that the current situation that shook the world after the collapse of Lehman Brothers nearly 15 years ago is not another global financial crisis. “I don’t think this is a time for panic or alarm,” Summers said. “This is not 2008, where people had to worry about whether they could get their money out of an ATM machine. It is not like that at all.” First Republic FRC, -26.16% tumbled another 27% amid reports the company is exploring its strategic options, including a possible sale. The stock is trading at $21.88 in morning action, near its all-time low of $22.48 a share, amid concerns over bank solvency following the failures of Silicon Valley Bank, Signature Bank and Silvergate Bank in the past week. At last check, First Republic is down 77% over the past week. In Thursday morning action, JPMorgan Chase & Co. JPM, +0.16% 1% , Morgan Stanley MS, -0.05% 1.8% and Citigroup Inc . C, -0.11% is down 1.4%. Bank of America Corp. BAC, +0.86% fell 0.8% and Wells Fargo & Co. WFC, +0.64% fell 1.3%. Meanwhile, Credit Suisse Group’s CS, +3.47% stock rose 2.2% after it said it secured a $54 billion credit facility from the Swiss National Bank. Goldman Sachs Group Inc. GS, -0.45% fell 1.7%. The Wall Street Journal reported that Goldman Sachs downplayed the risk that a proposed $2.25 billion capital raising at the Silicon Valley bank could trigger a crisis of confidence and a further run on deposits. SVB exited the business on Friday, sparking widespread concern in the sector. Meanwhile, KBW managing director David Conrad said on Thursday that the failures of Silicon Valley Bank, Silvergate Bank and Signature Bank over the past week are likely to result in increased regulations over time which could in turn affect industry profitability. Sen. Elizabeth Warren on Wednesday reiterated her criticism of easing the 2018 Dodd-Frank rules for small and medium-sized banks and joined dozens of fellow Democratic lawmakers to introduce a bill that would repeal that rollback. Western Alliance Bancorp’s WAL, -4.20% stock fell 9.8% after credit rating agency Fitch Ratings put the company’s debt and deposit ratings on rating watch negative. Analysts at Fitch said current market conditions have “created liquidity stress beyond baseline assumptions.” The rating agency said it is considering assigning a negative or stable outlook for the bank based on market conditions and the impact on the bank’s deposit franchise, long-term earning power and capitalization. Fitch noted that Western Alliance Bancorp reported cash reserves of $25 billion in a March 13 filing. The company’s cash stands at about 47% of total deposits as on December 31. The bank also reported “moderate deposit outflows and insured deposits of more than 50% of total deposits,” Fitch said. The rating agency also said the Federal Reserve’s new bank term funding program “provides a further liquidity backstop on favorable terms” for Western Alliance. The program, set up after the collapse of two US banks last week, could see the use of up to $2 trillion, according to a new analysis by JP Morgan. JPMorgan analyst Nikolaos Panigirtzoglou said the six regional banks alone hold a combined $460 billion in uninsured deposits. About $2 trillion is the same amount of bonds held by US banks outside the five largest banks. Charles Schwab Corp. SCHW, -2.64% fell 3.1%. Schwab executives and directors bought about $7 million worth of stock in the financial-services company on Tuesday and Wednesday in an apparent vote of confidence in the company’s ability to weather ongoing bank losses. Jefferies analyst Ken Yusdin said in a note to clients on Thursday that he had met with Citigroup Chief Financial Officer Mark Mason and said the company was in a strong position despite a more uncertain operating environment. Citi is sticking to its target for a return on average tangible common shareholders’ equity (ROTCE) of 11% to 12%, he said. ROTCE is calculated by dividing net earnings attributable to common shareholders by average monthly tangible common shareholders’ equity. Citi continues to benefit from high capital levels, ample liquidity and “sticky” operational deposits, Usdin said. “While Citi faces a more uncertain operating environment and current volatility, the bank’s overall strategic plan remains intact, including its turnaround strategy, growth priorities and cost reduction plans,” Usdin said. The KBW Nasdaq Bank Index BKX, -0.71% fell 2.3% and the Financial Select Sector SPDR exchange-traded fund XLF, +0.27% lost 0.7%. Also read: New Fed bank facility could see use of up to $2 trillion, JP Morgan analysts say

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