PacWest Bank is weighing strategic options, including possible sale
PacWest Bancorp, a regional bank teetering after the collapse of three rival lenders, has been weighing a range of strategic options, including a sale, according to people familiar with the matter.
The Beverly Hills bank has been working with a financial advisor and has also been considering a breakup or a capital raise, said the people, who asked to not be identified because the matter isn’t public. Although it is open to a sale, the company hasn’t started a formal auction process, the people said.
An outright sale has been hindered because there aren’t many potential buyers interested in the entire bank, which comprises a community lender called Pacific Western Bank and some commercial and consumer lending businesses, the people said. A potential buyer would also have to book a big loss marking down some of its loans, the people said.
A representative for PacWest declined to comment.
PacWest tumbled 44% in late New York trading Wednesday after closing down 2% in regular trading. The shares had slumped 28% on Tuesday as investors retreated from regional bank stocks after JPMorgan Chase’s deal on Monday for the failed First Republic Bank. PacWest, which has lost about 85% of its value since the beginning of March, has a market value of about $772 million.
PacWest Bancorp is moving to shore up liquidity to protect itself after customers pulled 20% of their deposits since the start of the year.
The bank said when reporting earnings last month that deposits had stabilized after a rush of withdrawals in March prompted concerns about its health and forced it to shore up liquidity. The bank has been exploring the sale of its lender finance business to free up capital and shrink its balance sheet.
PacWest has about 70 branches, primarily in California, as well as about $44 billion in assets, according to its website.
