Pacwest drops 29pc as Dimon calls for shortsellers inquiry

SHARES in Pacwest plunged by more than a quarter yesterday after warning that customers were continuing to pull deposits from the embattled US regional lender.

The California-based bank said that deposits fell by nearly a 10th last week after it confirmed it was exploring a potential sale amid turmoil in the US banking industry.

It came as Jamie Dimon, the chief executive of Wall Street giant JP Morgan, said that regulators should investigate the role of short-sellers in the recent market chaos.

Pacwest, which is regarded as one of the weakest of the mid-sized regional banks, struggled following the collapse of Silicon Valley Bank (SVB) in March.

Deposits at the Beverly Hills-headquartered bank fell by more than $5bn (£4bn) to $28.2bn during the first three months of the year.

Last month, it said deposits had stabilised, but yesterday it warned that customers began to pull their cash from the bank again last week, with the majority of withdrawals coming on May 4 and May 5.

It came after the company confirmed that it was exploring a sale and was approached by several potential bidders regarding a deal.

The bank said: “The news headlines increased our customers’ fears of the safety of their deposits.”

Shares in Pacwest, which have plunged by more than 70pc this year, fell as much as 29pc in early trading yesterday, valuing the company at around $530m. The bank was worth more than $3.5bn at the beginning of February.

The US regional banking sector has been hit by a crisis of confidence in recent months, which has triggered the collapse of three lenders: SVB, Signature Bank and First Republic.

Yesterday, Mr Dimon questioned the behaviour of some short-sellers, and said he believed the Securities and Exchange Commission should take a closer look for any “unscrupulous” tactics.