Pacwest shares climb after it announces sale of £2.1bn real estate portfolio
Pacwest shares rose in pre-open trading today after it confirmed the sale of a portfolio of real estate loans worth $2.6bn (£2.1bn).
The struggling Californian bank agreed to sell a portfolio of 74 loans to property investment firm Kennedy Wilson. Its share price jumped as much as 10 per cent in early morning trading.
Pacwest could also sell an extra six real estate construction loans worth around $363m. It said the deal was “consistent with the previously announced strategy… to pursue strategic assets sales and focus on our core community banking business”.
The deal is expected to close during the second and third quarter of 2023, subject to normal closing conditions.
Pacwest has been one of the banks worst hit by the volatility which followed the collapse of Silicon Valley Bank. In the first quarter it lost around $5bn as skittish depositors pulled their cash.
The bank reported earlier this month that it was considering “all options” after its share price fell significantly in the instability following JP Morgan’s acquisition of First Republic.
Regional bank stocks have strung together a few days of solid performance amid hopes that the regional banking crisis is coming to an end.
Many investors have been concerned by the ratio of uninsured deposits in regional US banks as well as unrealised losses on long-dated assets. Some have also blamed the volatile market movements on short sellers.
Looking forward, regional banks have exposure to the commercial real estate sector which is expected to struggle over the coming months. Investors are concerned that rising rates of default on real estate loans could tip teetering lenders over into collapse.