PacWest shares jump 19% after the Beverly Hills-based bank agrees to sell $2.6 billion of real-estate loans to shore up its finances
- PacWest shares jumped Tuesday after the US bank announced a $2.6 billion real-estate loan sale.
- The Beverly Hills-based lender agreed to sell the loans to Kennedy-Wilson Holdings at a $200 million discount.
PacWest Bancorp's shares jumped Tuesday after the California-based lender struck a deal to sell $2.6 billion of its real-estate loans in a bid to bolster its balance sheet.
The US bank agreed to sell 74 of its property construction loans to Kennedy-Wilson Holdings at a $200 million discounted price of about $2.4 billion, according to a regulatory filing.
The shares surged 18.5% in Tuesday's pre-market trading to $8.12 apiece, after surging 19.55% on Monday on news of the deal.
PacWest will also sell six more real-estate construction loans to Kennedy-Wilson for about $363 million if it secures approval, according to the filing.
The loan sale is currently expected to close in multiple tranches during the second and early part of the third quarter of 2023, both PacWest and Kennedy-Holdings said in a statement.
The move comes after PacWest faced headwinds following the collapse of three US banks in recent months.
The lender has been bleeding customer deposits, which dropped 9.5% in the week ended May 5. Shares have plunged about 65% since Silicon Valley Bank's downfall in March, as investors grow wary of big unrealized losses on some US lenders' bond portfolios.
Smaller and mid-sized banks' large exposure to real-estate loans have also sparked jitters among investors.