First Republic rallies 25% Monday to lead regional banks’ comeback

Regional bank stocks rallied sharply in premarket trading Monday as investors were encouraged by reports that recent pressures on the industry could ease and additional government support could be on the way.

Shares of First Republic rose 25% in premarket trading, brushing off the struggling company’s steep losses in March. Shares of PacWest Bancorp were up about 11%, while Western Alliance gained more than 6%.

The SPDR S&P Regional Bank ETF (KRE) rose more than 3%.

Monday’s moves follow several signs that the crisis could ease for regional banks in the United States.

Bloomberg News reported Saturday that US officials are considering expanding federal programs that provide banks with more liquidity, in part to help First Republic search for a buyer.

CNBC also reported on Saturday that the inflow of deposits at major banks from the smaller regions has slowed significantly.

Regional bank stocks have been under heavy pressure this month, with regulators closing SVB on March 10 and Signature Bank two days later following significant deposit outflows. Federal regulators announced that depositors at those two banks would be sanitized while providing additional liquidity to other banks.

First Republic, which had a similar business model to the SVB, was of particular concern. Eleven larger banks poured $30 billion into First Republic as a vote of confidence in the smaller company.

Monday’s gains also followed the announcement that First Citizens BancShares agreed to buy a large portion of SVB, including its deposits and branches. Shares of First Citizens were up 40% in premarket trading.

Parts of the smaller Signature Bank have already been bought by New York Community Bancorp. And in Europe, Swiss officials brokered the sale of Credit Suisse to UBS, though Credit Suisse’s problems seem largely unrelated to the US regionals.