JPMorgan Chase's rescue of First Republic Bank in the United States this week didn't herald the end of the banking crisis.
Investors have shifted their attention to other regional lenders, dumping shares of California's PacWest, which is now exploring "all strategic options." The bank's stock is down 36% in pre-market trading on Thursday.
First Horizon and TD Bank also called off a $13 billion deal Thursday that would have formed America's sixth-largest bank. First Horizon's stock has plummeted about 40% in recent months, and it's plunging further pre-market.
What's happening: Tumult in the sector following Silicon Valley Bank's collapse in March has put Wall Street on alert, ready to pounce at any sign of weakness.
Bank shares have struggled in this climate. The KBW Bank Index, which tracks 24 leading US lenders, has plunged 32% since the beginning of March.
Yet across the Atlantic, losses have been much more limited. The Stoxx Europe 600 Banks Index, which tracks 42 big EU and UK banks, has shed 14% over the same period. Year-to-date, European banks are up more than 3%, while US lenders are down 26%.
What accounts for the divergence? Analysts note that in Europe, the banking sector is much more consolidated, and most of its players run diversified businesses. They're also subject to stricter regulation. That eases anxiety about the industry at a moment of heavy scrutiny.
"It's really critical infrastructure for the European economy," said Guillaume Menuet, Citi Private Bank's head of investment strategy and economics in Europe, the Middle East and Africa. "The degree of oversight has always been larger."
Depositors in Europe are also less likely to yank their money, Menuet said. Andrea Orcel, the CEO of Italy's UniCredit, made this point on a call with analysts Wednesday after the bank reported earnings.
"Our deposit base is sticky, diversified, stable and high quality," Orcel said.
Turmoil in the United States — which helped bring down Switzerland's scandal-ridden Credit Suisse — is unlikely to infect other lenders in Europe, Orcel added.
"The economic shocks and unexpected fragility we have witnessed across the US and in Switzerland raised [questions] about both banks' strengths and how they are operating day-to-day," he said. "These were idiosyncratic and specific to a segment of our industry, with limited read-across to European banking."
(Shares of UniCredit, which has been boosting shareholder rewards, are up 37% year-to-date.)
Broader market dynamics have also helped European bank stocks. Investors have shown greater willingness to buy European equities after shunning the region for some time. Improvements to the economic outlook at the start of the year, among other factors, have bolstered sentiment.
The European Central Bank, which meets Thursday, has also been slower than the US Federal Reserve to hike interest rates. That means banks are still in a sweet spot in which they can make more money off loans without having to meaningfully increase what they pay to their depositors, Menuet said.
Take note: Fed Chair Jerome Powell said Wednesday that the US banking sector remains solid.
"Conditions in the sector have broadly improved since early March, and the US banking system is sound and resilient," he said. "We will continue to monitor conditions in the sector. We're committed to learning the right lessons from this episode."
But as regional banks continue to stumble, volatility in bank shares looks set to continue.
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