Bank stocks rally in sharp reversal from previous session

First Republic (FRC) and other regional banks are up sharply, in a stunning reversal from the previous session when the sector was hammered following the collapse of Silicon Valley Bank.

First Republic shares are up more than 55% after losing a record 62% of their value on Monday.

Western Alliance’s (WAL) shares are up 47%, while PacWest Bancorp (PACW) stock is rebounding 50% after falling 21% on Monday. Zions Bank Corporation (ZION) is up 19% following a slide of 25% in the previous session.

Charles Schwab is rebounding 13% on Tuesday after closing 11% lower in the previous session. The financial services company’s stock was hit despite assurances it was well positioned, and had plenty of liquidity on hand.

Market observers on Twitter noted the oversold conditions of the regional lenders on Monday, despite measures from U.S. regulators which guaranteed deposits were safe. Famed investor Michael Burry wrote, “This crisis could resolve very quickly. I am not seeing true danger here.”

Last Friday, Silicon Valley Bank, previously owned by SVB Financial (SIVB), was shut down by regulators as depositors flocked to get their money out of the bank. Many of Silicon Valley Bank’s clients were startups and venture capital firms, with accounts that far exceeded $250,000, the amount normally insured by the Federal Deposit Insurance Corporation, or FDIC.

On Sunday, another domino fell. Crypto-focused Signature Bank of New York (SBNY) was closed by its state chartering authority.

Sunday evening U.S regulators announced all depositors of SVB and Signature Bank would be made whole, and announced new facilities to backstop deposit withdrawals across the banking system.

Ines is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre

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