2023-03-13 15:58:19 ET
Citigroup ( NYSE: C ) stock sank 7.0% in late Monday trading in the first full trading day after the Federal Deposit Insurance Corp. (FDIC) took over Silicon Valley Bank, in the U.S.'s second-biggest bank failure ever and the biggest since Washington Mutual failed during the 2008 financial crisis.
Bank stocks, overall, swooned with the KBW Nasdaq Bank Index ( BKX ) dropping 11% , the most since March 2020 when the pandemic hit.
In response to concerns about bank depositors seeking to pull their funds from accounts, the Federal Reserve on Sunday created a facility to extend short-term loans to eligible banks, helping to support their cash needs. And while the FDIC assured that all deposits at failed banks Silicon Valley Bank and Signature Bank will be guaranteed that doesn't extend to subsequent bank failures.
On Sunday, hedge fund billionaire Bill Ackman said via tweet that other banks are likely to fail even with the government intervention, however, "we now have a clear roadmap for how the gov't will manage them."
On Monday, though, he called for the government "to explicitly guarantee all deposits now. Hours matter."
Regional bank stocks bore the brunt of the bank selloff. KeyCorp ( KEY ) dropped 28% , First Republic ( FRC ) sank 61% , Comerica ( CMA ) tumbled 27% , Western Alliance ( WAL ) skidded 44% , and PacWest Bancorp ( PACW ) declined 20% .
That decline has made regional bank stocks more attractive, Ackman said. "Regional bank stocks are an incredible bargain now as long as the gov’t does the right thing, and I am confident it will."
On Friday, Wall Street analysts called the bank stock slide an overreaction to "idiosyncratic" events at two banks.
For further details see:
Why did Citigroup stock drop today? Banking sector shaken by Silicon Valley Bank