After nearly a week of tumult, the specter of a billowing crisis over the banking industry appeared to ease, at least for the moment, as pressure lifted on the midsize and regional lenders most in peril.
Shares of First Republic, which over the weekend had been forced to slap together a multibillion dollar rescue package to shore up its finances, soared nearly 60 percent — in the range of its plunge from a day earlier, though still down by more than half over the past five trading days.
Western Alliance, previously a little-known Arizona bank, saw its stock shoot up 50 percent after a disclosure from Citadel, the investment giant run by the billionaire Ken Griffin, that it had taken a stake in the hard-hit lender.
Zions Bank of Utah, PacWest Bankcorp of Los Angeles and Charles Schwab, the Texas financial conglomerate, also bounced back after deep slides on Monday.
While stock prices aren’t a clear proxy for a bank’s health, falling shares can set off panic in borrowers and lead to a bank run. The recent downturn in the industry, in fact, was set off in part by just that, when shares in Silicon Valley Bank, a technology-focused lender, plummeted after it disclosed plans to raise money needed to pay out some depositors.
Less than two days later, Silicon Valley Bank, which had roughly $175 billion in deposits, was taken over by federal regulators, making it the biggest bank failure since the 2008 financial crisis. Shares in other relatively small institutions have since fallen precipitously on fears that they, too, could be insolvent, though thus far only one other bank, Signature Bank, has been seized by regulators.
On Sunday, federal officials committed to paying out depositors at those fallen banks in full, even if the banks did not have sufficient money. Depositors reported Monday that they were able to take out funds, an enormous relief to employers and individuals who had been worried about when and if they would be able to access their money.
Officials stressed, however, that stock and bond holders in the banks themselves would still be in line to lose money on their investments.
Much uncertainty remains. As bank shares were recovering Tuesday, none had yet provided formal updates about the degree to which skittish customers were pulling out their money.
On Monday, the First Republic executive chairman, Jim Herbert, told CNBC that the bank was not experiencing an unusual level of withdrawals.
Investors seem to be assuming that the federal backstop that was applied to Silicon Valley Bank and Signature would also apply to any other fallen lender, said Greg Hertrich, a U.S. bank strategist at Nomura and a bank executive for more than three decades.
“Having been through a bunch of these, I can say: This one’s moving fast,” Mr. Hertrich said. “There are people who seem to believe that every deposit account is guaranteed without limit. I have not seen any indication that is what regulators have expressed.”
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