PacWest Bancorp Latest US Bank In Trouble After Deposits Run, Cash Infusion

PacWest Bancorp is the latest US bank caught in a liquidity crisis after a 20% run on its customer deposits and despite a cash infusion of more than $1 billion to keep it afloat, media reported on Wednesday

WASHINGTON (UrduPoint News / Sputnik - 22nd March, 2023) PacWest Bancorp is the latest US bank caught in a liquidity crisis after a 20% run on its customer deposits and despite a cash infusion of more than $1 billion to keep it afloat, media reported on Wednesday.

PacWest shares were down about 9%, or $1.11, to $11.10 by 11:20 a.m. ET (15:20 GMT) after reports that Atlas SP Partners, a unit of hedge fund Apollo, had pumped $1.4 billion into the bank holding company based in Beverly Hills, California.

The United States has been enveloped in a banking crisis amid a federal takeover of two commercial banks - Silicon Valley and Signature - and industry help extended to a third bank, First Republic. All three institutions had faced what is commonly referred to as "bank runs" or rapid and massive withdrawals of deposits by customers fearing the safety of their money.

The crisis took on an international dimension last week after renowned Swiss investment bank Credit Suisse went under and had to be bought by rival and compatriot UBS.

US authorities from Treasury Secretary Janet Yellen to President Joe Biden have issued repeated assurances over the past two weeks that the nation's banking sector was secure, unlikely to face another financial crisis like in 2008, and emphasized that the Federal Deposit Insurance Corp was ready to backstop any customer loss of deposits in the event of a bank takeover.

Despite these, jitters over the solvency of US banks have remained. A study by a group of private economists concluded last week that some 186 US banks may have troubled finances that have not been reported yet, suggesting that the banking crisis may be bigger than thought.