"US regional banking stocks fell sharply on Thursday after two banks disclosed issues with bad and fraudulent loans, amplifying concerns on Wall Street around the state of credit markets. Zions Bancorp announced it had a $50m charge-off over two bad loans from its subsidiary, California Bank & Trust in San Diego. Western Alliance also said it was dealing with a fraudulent borrower."
"The regional banking industry has been under scrutiny after First Brands, an auto parts supplier, filed for chapter 11 bankruptcy in late September over creditor concerns. In its bankruptcy filing, First Brands disclosed that it had at least $10bn to $50bn in liabilities against $1bn to $10bn in assets, the product of what appeared to be risky off-balance-sheet financing. Amid the bankruptcy, First Brands' creditors filed an emergency court filing saying that $2.3bn of the company's assets had simply vanished."
US regional banks dropped sharply after two lenders reported bad and fraudulent loan issues, raising credit-market concerns. Zions Bancorp recorded a $50 million charge-off tied to two bad loans at its California Bank & Trust unit. Western Alliance reported dealing with a fraudulent borrower. Zions fell over 11%, Western Alliance over 10%, and Jefferies declined about 9%, with broader indices also down. First Brands filed chapter 11, showing $10bn–$50bn in liabilities versus $1bn–$10bn in assets and alleging $2.3bn of vanished assets. Prosecutors opened an investigation, Jefferies and UBS reported exposure, and unpaid-invoice collateral and shadow banking practices drew scrutiny.
Read at www.theguardian.com
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