US bank stocks surge after Yellen’s support

Regional lenders bounced back Tuesday following the remarks by Treasury Secretary, ‘it’s our intention to remain vigilant in the days and weeks to come’ Yellen said.

Regional bank stocks rebounded Tuesday as Treasury Secretary Janet Yellen pledged further assistance to depositors if needed and a second attempted rescue of troubled San Francisco lender First Republic took shape.

First Republic was up 39% this morning as of 11:35 am ET, just one day after plummeting 47% to its lowest-ever closing price. The March 10 failure of Silicon Valley Bank put First Republic under tremendous investor pressure, and an infusion last week of $30 billion in deposits from 11 other banks didn’t stop the slide.

One of those 11 banks, JPMorgan Chase (JPM), is now providing advice to First Republic as the bank seeks other options. Raising capital from outside investors is among the possibilities, these people said. Another is turning some deposits provided by bigger banks into equity, these people said.

Shares of other regional banks that received similar scrutiny in the wake of Silicon Valley Bank’s seizure also rose Tuesday. PacWest (PACW), Western Alliance (WAL) and Zions (ZION) were all up.

The regional bank bounce on Tuesday followed a pledge Yellen made before an American Bankers Association conference to take more actions to stabilize the banking system if needed. She and other government officials decided earlier this month to protect uninsured depositors at both Silicon Valley Bank and the failed Signature Bank, while also freeing up more liquidity in the banking system.

“The steps we took were not focused on aiding specific banks or classes of banks. Our intervention was necessary to protect the broader U.S. banking system,” Yellen said in prepared remarks released by the Treasury. “And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.”