“Bank Crash in the United States: New Cascade of Crashes and Uncertainty in Regional Banking Sector”

By Laura Sanchez

Investing.com – European markets in the green on Friday – , , … – in an intense week of central banks.

We will see if investors remain calm in the European stock market after a session in the red on Wall Street on Thursday.

Uncertainty persists in the US regional banking sector, with steep declines. “Yesterday, the sector lost 6% and since the beginning of the year, it has lost 38%”, points out Renta 4 (BME:).

Once again, several banks fell on the stock exchange, such as PacWest (NASDAQ:) (-51%), Western Alliance (NYSE:) (-38%), both, according to market reports, in search of strategic options which would include the partial or total sale of their activities. The pressure is also on other names such as First Horizon (NYSE:) (-33%) and Zions Bancorp (NASDAQ:) (-12%).

“Investors are very nervous and I think what worries them is that Silicon Valley has lost 75% of its deposits in 36 hours. There is not a bank in the world that can really handle that,” warns Tom Michaud, CEO of KBW, at the microphone of CNBC.

“A proposal to recapitalize the Deposit Guarantee Fund following recent outflows ($19.2 billion cost of covering uninsured deposits from Silicon Valley and Signature Bank) will be presented next week, a payment that could fall on the big banks, while possible changes to the insured levels ($250,000) are being considered,” explains Renta 4.

“Diverging data from SERIX suggests that one of the main questions facing investors is whether the rescue of First Republic represents the end of a troubled era for U.S. banks or the start of a difficult chapter for their banks. European counterparts,” warns Michael Hall, head of distribution at Spectrum Markets.

“Furthermore, all eyes are on announcements from US and Eurozone central banks these days, as well as the Bank of England meeting next week. These meetings give us clues about what’s going to happen,” Hall said.