Regional bank shares are under pressure again.
(Photo: dpa)
Dusseldorf Fear of a regional banking crisis in the US is back: First Republic Bank was the third bank to collapse in less than two months. The “KBW Regional Banking ETF”, which invests primarily in regional banks, has now fallen to its lowest price since November 2020.
The seriousness of the situation is shown by the behavior of professional investors who make money by betting on falling prices. As of May 2, these so-called short sellers have invested almost 14 billion dollars in the 30 largest regional institutes alone in order to benefit from a further fall in prices. This is shown by an analysis by the financial data provider S3 Partners.
Short sellers make money on falling prices by borrowing stocks that they see as price risks for a fee. Then they sell the stock immediately to buy it back cheaper before the redemption date. The difference between the sell and buy price is your profit.
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