Western Alliance shares pull back after it denies report of potential sale

Western Alliance shares pulled back from their session lows after the Arizona-based bank denied it was exploring a potential sale.

The Arizona bank described a report in the Financial Times that it was considering a potential sale of all or part of its business as “categorically false in all respects”, adding: “Western Alliance is not exploring a sale, nor has it hired an advisor to explore strategic options.”

Two people briefed on internal discussions told the FT that the bank, which has a $2bn market capitalisation, was exploring strategic options including a potential sale of all or part of its business.

The Arizona-based bank, which has $65bn of assets, fell by as much as 45 per cent after the FT report, before recovering to trade 39 per cent lower. Earlier on Thursday, PacWest, another bank that has unnerved investors, announced that it was exploring its options.

Shares of US regional banks have come under heavy selling pressure this week after the regulator-brokered takeover of First Republic by JPMorgan Chase failed to restore confidence in the sector.

In a press conference on Wednesday, US Federal Reserve chair Jay Powell tried to soothe concerns about the bank turmoil, saying conditions across the sector had “broadly improved” since the period of “severe stress” in early March and that the system as a whole was “sound”.

US officials are watching deposit flows more closely than share prices, which Powell said on Wednesday had stabilised, given the view that they are a better indicator of the health of a bank.

“The resolution and sale of First Republic is an important step toward drawing a line under that period of severe stress,” he said before PacWest announced plans to explore a potential sale.

Western Alliance said on Wednesday that total deposits had risen to $48.8bn from $47.6bn at the end of March. It said it had “not experienced unusual deposit flows following the sale of First Republic”. It said 74 per cent of deposits were covered by Federal Deposit Insurance Corporation guarantees.

Western Alliance for much of the past two decades was run by Robert Sarver, the former owner of the Phoenix Suns NBA basketball franchise.

Earlier this year, Sarver was forced to sell the Suns after an investigation found evidence that under his leadership the team had created a hostile environment both for black people and women. Sarver was fined $10mn and suspended from the NBA and the WNBA for a year.

Sarver, who had held the top role at Western Alliance since 2003, stepped down as chair of the bank last year as the NBA controversy unfolded.