(Bloomberg) -- A selloff in global financial stocks paused Tuesday after a two-day, $465 billion wipeout.

A gauge of European bank shares fluctuated between gains and losses and US lenders rebounded in premarket trading, led by a 22% surge in First Republic Bank. Losses widened in Asia, sending an MSCI index of regional financial stocks down 3%. Mitsubishi UFJ Financial Group Inc. slid 6.9% in Japan, South Korea’s Hana Financial Group Inc. fell 3.9%, HSBC Holdings Plc dropped 1.3% in London and Spain’s CaixaBank SA rose 0.5%.

The collapse of Silicon Valley Bank triggered declines Friday and Monday on concern that other banks may face funding shortfalls because of losses on their bond holdings, even as political leaders sought to reassure markets that there’s no risk of contagion. Treasury yields fluctuated after plunging Monday amid expectations the Federal Reserve will hold off raising rates due to turmoil in the banking system.

“Once we move away from initial shock, rather than painting everyone with the same brush there is a tendency to scrutinize the models a bit more, the banks’ deposit bases and access to liquidity,” said Gary Schlossberg, global strategist at Wells Fargo Investment Institute. “There has been no foot-dragging by the government; we could even see more steps down the road to stabilize the system and ultimately.”

The aggregate market value of companies included in the MSCI World Financials Index and the MSCI EM Financials Index dropped by about $465 billion over Friday and Monday. US regional banks were among the hardest hit Monday as the KBW Regional Banking Index sank 7.7%, its sharpest plunge since June 2020.

First Republic’s shares have plunged almost 73% in three sessions, making it the top loser in the MSCI World Financials gauge in the period. Moody’s put the lender’s long-term credit ratings on review for downgrade.

European bank stocks stabilized after slumping Monday. Credit Suisse Group AG was an exception, falling another 4.4% after saying it has identified “material weaknesses” in previous reporting and is adopting a remediation plan. 

Turmoil Slams Bank Stocks Even as Regulators Step In

Japan Banks

Major northern Asia banks mostly have “minimal risk of the sudden run on deposits that crumpled Silicon Valley Bank” given their solid deposits, asset mixes and liquidity, Bloomberg Intelligence analyst Francis Chan wrote in a note. “Smaller lenders may harbor liquidity and credit risks that could easily be overlooked.”

Japanese financial stocks have been among the hardest hit in the region. That follows a strong run-up since December amid signs the Bank of Japan was pivoting toward tightening after years of ultra-loose monetary policy.

Japanese banks feature prominently among the highest unrealized loss-to-equity ratios in the region, according to data on about 130 Asia Pacific lenders with more than $5 billion in assets compiled by Bloomberg. Jimoto Holdings Inc., Tsukuba Bank Ltd. and Fukushima Bank Ltd. are among those with unrealized loss-to-equity ratios of at least 9%. All three, which have market caps below $150 million each, have fallen more than 10% in three days.

“I’m selling banks and insurers today,” said Taku Ito, chief fund manager at Nissay Asset Management Corp. “No doubt it’s a defeat but I think a lot of fund managers are also doing the same because bank shares had been rising and a lot of growth managers have been increasing bank shares.”

SVB Crisis Spurs Treasury Exposure Concerns in Japanese Banks

--With assistance from Jeanny Yu, Ishika Mookerjee, Sujata Rao and Hideyuki Sano.

(Updates to add European stocks in second paragraph.)

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