Bank stocks jumped into an uneven rebound Tuesday, continuing to swing wildly as regulators work to shore up the financial sector. First Republic Bank led the morning movers after shares nearly halved Monday. Overseas, Deutsche Bank climbed following the UBS deal to buy Credit Suisse. Here are the fastest-moving bank stocks heading into trading Tuesday.
Yellen Speaks At ABA Summit
Meanwhile, Treasury Secretary Janet Yellen released prepared remarks for the American Bankers Association's Washington Summit on Tuesday, saying that the government was ready to provide additional deposit guarantees in the event that the banking situation worsens.
"The steps we took were not focused on aiding specific banks or classes of banks," the statement said. "Our intervention was necessary to protect the broader U.S. banking system. And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion."
Yellen addressed the ABA at the gathering in Washington, D.C., at 10 a.m. ET. "Our banking system is sound, even as it has come under some pressure," Yellen said during the Q&A portion of the summit. We're currently seeing contagious bank runs, whereas the 2008 meltdown was a solvency crisis, she said.
"We demonstrated last week that the federal government is resolutely committed to taking actions that will mitigate financial stability risks," Yellen said. "Every step we have taken has been intended to reassure the public that our banking system is resilient and we stand behind the banking system. The public should have confidence in our banking system."
The situation has improved and aggregate deposit outflows have stabilized, she said.
Yellen said the Fed's new lending facility and discount window are working as intended, and regulators will remain vigilant in the coming weeks and take steps to intervene when necessary. Going forward, it's important that banks assure customers their deposits are safe and that the banking system is sound.
Raising The Debt Limit
Yellen believes it's "utterly essential" that Congress raise or suspend the debt limit. She's concerned about the negative effects of waiting until the last minute, referencing the 2011 budget standoff which saw the government's credit rating downgraded for the first time in history. It could result in higher borrowing costs for the U.S., business owners and consumers.
"We have the safest and most liquid financial system of any in the world," Yellen said. "If there were a failure to raise the debt limit, I believe it would be absolutely catastrophic, and take an economy that's performing very well... and threaten all of that."
Bank Stocks Poised To Climb
First Republic Bank spiked 29.5% Tuesday, following Wall Street Journal reports Monday that JPMorgan CEO Jamie Dimon is leading discussions for a new rescue plan. First Republic received a $30 billion deposit from America's 11 largest banks on Friday. Dimon and fellow CEOs are mulling converting some or all of the $30 billion in deposits into a capital infusion. A sale or outside capital injection are also being considered. On March 12, First Republic secured $70 billion in additional liquidity from JPMorgan and the Federal Reserve.
PacWest Bancorp posted its second day of gains, rising 18.8% Tuesday after its 11% jump Monday. The Los Angeles-based bank provided a liquidity update Friday, reporting it "continues to have solid liquidity," with over $10.8 billion in available cash.
Federal Reserve Rate Hike Odds Grow As Bank-Crisis Fears Ebb; S&P 500 Rises
UBS Group jumped roughly 12% Tuesday and climbed Monday following its Credit Suisse acquisition. Swiss regulators brokered a deal on Sunday for UBS to buy the fellow Swiss banking giant for 3 billion Swiss francs, equating to $3.24 billion. The combined institution will have more than $5 trillion in assets invested globally.
The Swiss National Bank provided a $108 billion liquidity-assistance loan to UBS to facilitate the deal. And the government pledged $9.7 billion to backstop losses as part of the takeover. Meanwhile, Germany's Deutsche Bank rose 6.9% Tuesday as European banks breathed a sigh of relief.
New York Community Bank rose 6.7% Tuesday and ran 6.5% higher before the opening bell. NYCB stock skyrocketed nearly 32% Monday after the FDIC announced a deal to sell substantially all of Signature Bank's deposits to New York Community's subsidiary Flagstar Bank on Sunday.
Regional Bank Stocks Rise
Phoenix-based Western Alliance climbed with regional banks Tuesday, rising 15% to reclaim its losses from Monday.
U.S. Bancorp stock rose 8.9% Tuesday after receiving a rating improvement. On Monday, Baird upgraded its rating on U.S. Bancorp to outperform from neutral with a 52 price target. Analyst David George called U.S. Bancorp a "high-quality regional bank with little to no downside and (about) 50% upside over time."
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