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FirstFT: PacWest is on the brink


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PacWest, the Beverly Hills-based bank, has become the latest regional lender look for a lifeline after its shares crashed after hours trading.

The bank said in a statement it was considering “all options to maximize shareholder value” after its shares fell 60% after the market closed yesterday amid the worst crisis for US banks since 2008.

Boutique investment bank Piper Sandler has been appointed to explore PacWest’s strategic options, according to two people briefed on the matter, days after First Republic was seized by US banking authorities and sold to JPMorgan Chase.

But no formal sale has yet been agreed, the people said. They added that the bank was also exploring a potential new capital raise.

The sharp drop in PacWest shares has raised new questions about the health of other regional banks in the United States. Western Alliance, which has become the center of investor angst following U.S. regulators’ seizure of three banks since March, fell more than a quarter in after-hours trading. Zions Bancorp and Comerica were down about 10%.

Meanwhile, a veteran of the 1980s US banking crisis has criticized the Federal Deposit Insurance Corporation’s decision to sell First Republic to JPMorgan.

Bill Isaac, who chaired the FDIC at the start of the savings and loan crisis and managed the collapse of what was then the nation’s seventh-largest bank, Continental Illinois, said in making the largest banks of the country “increasingly large”. you create fewer choices for regulators and consumers. Read the full interview

Here’s what else is happening today:

  • ECB decision on interest rates: The European Central Bank is expected to follow the US Federal Reserve today and raise interest rates another quarter of a percentage point. Read the preview here.

  • Kenvue to start trading: Johnson & Johnson consumer arm shares begin trading today after raising $3.7 billion in the biggest IPO for 18 months.

  • AI Summit: The chief executives of Google, Microsoft and ChatGPT maker OpenAI will be among those gathering at the White House today for what has been described as a “frank discussion” on new technology.

  • Results: Apple is the latest tech company to report earnings. Carlyle Group, Moderna, ConocoPhillips, Kellogg, Coinbase, Lyft and Expedia are also reporting.

  • Economic data : The United States and Canada release trade figures and unemployment claims for the week ended April 29.

We have just relaunched our Work This Newsletter with a new section where editor Isabel Berwick will answer all your office dilemmas. Sign up here and stay ahead of your workplace.

Five other top stories

1. Stocks in Europe fell this morning as investors digested the Federal Reserve’s latest comments after the US central bank raised its key rate by 25 basis points. Asian equity markets were mixed while US stocks closed lower. Learn more about the market’s reaction to yesterday’s interest rate hike.

2. Eli Lilly is to seek regulatory approval for an Alzheimer’s disease drug that a clinical study has shown could slow the progression of cognitive decline in patients in the early stages. The trial results mark the second significant breakthrough in a year for the treatment of a disease that affects 50 million people worldwide. Learn more about the drug donanemab.

3. Hedge funds and private equity groups will be forced to disclose more about potentially risky events at the Securities and Exchange Commission under a rule approved yesterday. The SEC has sharpened its focus on the private equity industry, whose gross assets are collectively valued at up to $25 billion.

4. A pair of Caribbean islands owned by late sex offender Jeffrey Epstein have been sold to the founder of the investment group Black Diamond Capital Management for $60 million. Great St James and Little St James were sold for less than half the original asking price of $125 million. The new owner failed to address the property’s grim past in a post-sale statement.

5. The police searched yesterday at the home of former Brazilian President Jair Bolsonaro following allegations of fake Covid-19 vaccine records. Bolsonaro denied changing records and reiterated that he was not immune to Covid-19. Learn more about Bolsonaro’s growing legal troubles.

The big read

Rina Gonoi

Rina Gonoi publishes a book about her time in Japan’s Ground Self-Defense Forces © FT montage/Getty Images

Next week, Rina Gonoi will publish her account of two harrowing years as a member of Japan’s Ground Self-Defense Force. His story has forced unprecedented self-examination at a pivotal time for Japan’s military as budgets rise to help the country respond to the heightened threat from China. Is the Japanese army fit for purpose, ask for today’s big read.

We also read. . .

  • Edward Luce: Nothing captures the fragility of American democracy better than the impunity of its Supreme Court.

  • Russian Indian tankers: Gatik Ship Management was born apparently nowhere as an international oil transport giant since the war in Ukraine.

  • ‘Birdwatching’: The strength of Twitter’s Community Ratings fact-checking feature is that it works by consensuswrites Jemima Kelly.

Card of the day

Cryptocurrency trading activity has declined even as bitcoin experiences its longest winning streak in more than two years, a sign that many investors are increasingly reluctant to participate in the rebound from a series of meltdowns and scandals in 2022.

Line chart of sum of daily orders within 1% of prevailing market price on Binance showing declining Bitcoin liquidity

Take a break from the news

Ibã Huni Kuin and Maná Huni Kuin ‘Untitled’ (c2017-19)

Psychedelic depictions of animals, plants and people are common in a frenzied new exhibition of artists from the Huni Kuin indigenous people at the São Paulo Museum of Art.

Additional Contributions by Tee Zhuo and Emily Goldberg

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