Shares in US bank Western Alliance have plummeted by 56pc amid reports it is exploring a possible sale, as fears of a crisis in the sector mount.
The Arizona-based bank’s shares dropped as it became the latest US regional lender to seek a lifeline amid the turmoil sweeping through the industry.
Western Alliance said it is exploring strategic options including a potential sale of all or part of its business, according to the Financial Times.
It comes after shares in Californian lender PacWest plunged 59pc to a new record low after it confirmed that it has been approached by several potential partners and investors about a deal. Talks are ongoing, it added.
PacWest insisted it has not experienced out-of-the-ordinary deposit flows following the failure and sale of First Republic Bank to JP Morgan Chase this week.
However, anxiety over stability and the potential for contagion has hit shares of other regional banks.
Arizona-based Western Alliance bank was down more than 17pc, while Metropolitan Banks shares fell more than 9pc.
Zions Bancorp slumped more than 14pc while Comerica fell 12pc and KeyCorp fell 8pc as investors remain concerned about the worst banking crisis since 2008.
Dennis Lockhart, the former Atlanta Fed President, said: “It looks like the markets are moving from one bank to the other and vulnerable deer in the herd are being kicked off.
“But I would like to believe that Jay Powell has information that suggest that the situation is contained or containable.”
A number of banks have been hit by the Federal Reserve’s 10 consecutive interest rate increases since last March in its fight against inflation.
The Federal Reserve on Wednesday raised its key interest rate by a quarter-point to the highest level in 16 years as part of that campaign.
Chairman Jerome Powell said the Fed would monitor several factors, including the turmoil in the banking sector.
The Fed chair stressed his belief that the collapse of Silicon Valley Bank, Signature Bank and First Republic Bank in the past six weeks will likely cause other banks to tighten lending, and that would help the Fed in its inflation fight.
Meanwhile, Canadian lender Toronto-Dominion Bank Group has called off its deal to buy First Horizon for $13.4bn (£10.7bn), sending the US bank’s shares down 44.5pc in premarket trading.
TD and First Horizon mutually decided to end the deal because there was no clarity on when they would get regulatory approvals, the two banks said in a statement.
