Rumors of a crisis reignited as there were reported signs of a large deposit withdrawal (bankrun) this month at PackWest, a local bank headquartered in Los Angeles.
According to CNBC, PacWest announced on the 11th (local time) that deposits fell 9.5% during the first week of this month. PackWest explained that most of the withdrawals occurred shortly after media reports that PackWest was seeking to sell its assets. Pack West’s stock price plunged 22.7% on the same day, falling about 50% this month alone and nearly 80% this year.
Until the 4th, Pack West said, “We are not experiencing abnormal range of deposit withdrawals,” but CNBC reported that the situation seems to have reversed.
Packwest explained that it has enough liquidity to fill the withdrawn funds from the bankrun. Currently, so-called uninsured deposits, which are not protected by depositors, are worth $5.2 billion, but available liquidity amounts to $15 billion.
The New York Stock Exchange closed mixed on the same day, with inflationary pressure eased as the Producer Price Index (PPI) fell below market expectations following the Consumer Price Index (CPI), but bank risks resurfaced, led by Pack West. Shares of other regional banks, including Western Alliance Bancorp and Zyans Bancorp, also fell.
Concerns over the possibility of a U.S. federal default have not subsided. On the same day, JP Morgan Chase, the largest bank in the U.S., said it is operating an “exhibition situation room” in preparation for a default that is due on the 1st of next month. The International Monetary Fund (IMF) said the U.S. default would have a very serious impact on the global economy, urging “all parties to resolve the issue urgently.”
