Bank stocks: First Republic leads five banks rise Tuesday
Bank stocks appeared poised for a bumpy rally on Tuesday, continuing to swing wildly as regulators work to prop up the financial sector. First Republic Bank (FRC) led the morning moves after shares nearly halved on Monday. Overseas, the German bank (DB) climbed after UBS (UBS) agreement to buy Credit Suisse. Here are the fastest moving bank shares heading into trading on Tuesday.
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Yellen speaks at the ABA summit
Meanwhile, Treasury Secretary Janet Yellen released prepared remarks at the American Bankers Association’s Washington Summit on Tuesday, saying the government was ready to provide additional deposit guarantees in case the banking situation worsened.
“The steps we took were not focused on helping specific banks or classes of banks,” the statement said. “Our intervention was necessary to protect the broader U.S. banking system. And similar actions may be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”
Yellen will address the ABA at the gathering in Washington, DC, at 10 A.M.
Bank stocks poised to climb
First Republic Bank rose 25% early Tuesday, after the Wall Street Journal reported on Monday JPMorgan (JPM) CEO Jamie Dimon is leading discussions for a new bailout plan. First Republic received a $30 billion deposit from America’s 11 largest banks on Friday. Dimon and other CEOs are considering converting some or all of the $30 billion in deposits into a capital injection. A sale or external capital injection is also considered. On March 12, First Republic secured $70 billion in additional liquidity from JPMorgan and the Federal Reserve.
PacWest Bancorp ( PACW ) is on track for its second day of gains, up 12.5% premarket Tuesday after an 11% jump Monday. The Los Angeles-based bank provided a liquidity update Friday, reporting that it “continues to have solid liquidity,” with more than $10.8 billion in available cash.
UBS Group jumped 7% on Tuesday and climbed on Monday after the Credit Suisse acquisition. Swiss regulators on Sunday brokered a deal for UBS to buy the other Swiss banking giant for 3 billion Swiss francs, equivalent 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 support loan to UBS to facilitate the deal. And the government pledged $9.7 billion to stem losses as part of the takeover. Meanwhile, Germany’s the German bank (DB) rose 6.4% on Tuesday morning as European banks breathed a sigh of relief.
New York Community Bank (NYCB) rose 5.6% Tuesday morning and ran 6.5% higher before the open. NYCB stock shot up nearly 32% Monday after the FDIC announced an agreement to sell substantially all of Signature Bank’s deposits to New York Community subsidiary Flagstar Bank on Sunday.
Regional ladders
Phoenix-based western alliance ( WAL ) climbed with regional banks early Tuesday morning, rising 9.4% to recoup losses from Monday.
US Bancorp (USB) stock rose 4.9% Tuesday morning after receiving a rating upgrade. On Monday, Baird upgraded his rating on US Bancorp to outperform from neutral with a price target of 52. Analyst David George called US Bancorp a “high-quality regional bank with little to no downside and (roughly) 50% upside over time.”
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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