🏦 Key news about regional banks

1. Losses from fraudulent loans at Zions Bancorp

• Zions reported that it will make a charge of US$ 50 million for two business loans it considers fraudulent. 

• These loans originated from its subsidiary California Bank & Trust. 

• Additionally, Zions has already set aside another US$ 10 million as a provision for potential additional losses. 

• In total, it expects to provision more than US$ 60 million for these questionable loans. 

2. Western Alliance also under pressure

• Western Alliance Bancorp revealed that it sued a borrower —Cantor Group V— alleging fraud due to breach of guarantee. 

• Following the announcement, its stock fell about 10.8%. 

• This case of Western Alliance is linked to the same group of problematic borrowers as Zions, which raises concerns. 

3. General decline in regional bank stocks

• The losses of Zions and Western Alliance have caused a drop in the KBW Regional Banking index (KRE): it fell 6.3% in one day. 

• Nervousness about credit quality has become a central theme for investors. 

• Moreover, credit uncertainty is already starting to impact other markets: European banks are also opening with declines due to these concerns. 

4. Wall Street reaction

• According to AP News, the S&P 500 fell 0.6%, the Dow dropped 301 points (−0.7%) and the Nasdaq lost 0.5% due to concerns about banks. 

• Fear of credit deterioration is causing a “flight to safety”: investors are closely watching smaller banks and their exposure to risky loans. 

• This episode rekindles fears similar to those seen in previous banking crises and raises questions about how many credit “stowaways” may exist (as Jamie Dimon said: “when you see one cockroach, there are probably more”). #bancoscentrales