U.S. Regional Bank ETFs at a Six-Week High: Here's Why

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2023-06-08 12:30:00  • 4 mins

By now, we all know that the U.S. economy went through a crisis triggered by its regional banking sector in the March-April period. The collapse of three U.S. regional banks since March raised fears of a volley of bank failures. The fragility of the banking system also highlighted concerns about regulatory oversight and systemic risk, and regulators must ensure effective risk management to mitigate these risks.

Stabilization of Regional Bank Stocks

However, as the chaos settled down, regional bank stocks bounced back with an immense force, due to easing banking volatility and investors considerably high risk-on sentiment. These stocks are now trading at a six-week high. Financial institutions such as PacWest and Western Alliance, which previously found themselves in troubled waters, have made a moderate comeback after a significant dip during the peak of the crisis.

U.S. banks could also face capital hikes of as much as 20% under new rules being prepared by U.S. regulators as part of a global effort to solidify capital requirements, Reuters reported on Monday, as quoted on Economic Times. This is another positive for the space.

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