Why are the smaller ASX 200 banks rebounding so strongly on Wednesday?

Kid putting a coin in a piggy bank.Kid putting a coin in a piggy bank.

The S&P/ASX 200 Index (ASX: XJO) is staging a tentative recovery so far this Wednesday after the carnage we saw on the share market yesterday. At the time of writing, the ASX 200 has gained a decent 0.33%, putting the Index back over 7,030 points. 

However, this optimism is not entirely reflected in the share prices of some of the big ASX bank shares.

The main loser is Commonwealth Bank of Australia (ASX: CBA). CBA shares are currently in the red, down by 0.27% at just over $95 each.

Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ) shares are all doing better. But they are still being eclipsed by the share price performances of some of their smaller, regional banking rivals.

The regional ASX 200 banks are on fire today. Take Bendigo and Adelaide Bank Ltd (ASX: BEN) for example. Bendigo Bank shares are currently smashing the market, up a pleasing 2.1% at present to $9.08 a share:

 It’s a similar story with Bank of Queensland Ltd (ASX: BOQ). Bank of Queensland shares are only just behind Bendigo, currently up by 2.09% at $6.60 a share right now.

So why are these smaller banks smashing both their larger ASX 200 banking share rivals and the broader market, this Wednesday?

Why are the smaller ASX 200 regional banks smashing the big four today?

Well, to understand what’s going on, let’s first look at the week that these smaller banks have had. As most of us would be aware of, Monday and Tuesday’s sessions this week were rather brutal affairs.

Yesterday, for instance, saw the Bank of Queensland share price hit a new multi-year low. In fact, both Bendigo Bank and Bank of Queensland fared far worse than the major banks earlier this week.

As we discussed yesterday, this was probably due to fears that these banks are less resilient to financial shocks as the major ASX 200 banks, simply due to their reduced size and scale.

To illustrate, CBA shares fell by 0.41% on Monday. But Bank of Queensland shares dopped by a far more dramatic 1.91%.

So now that investors clearly feel the worst has passed with the market jitters (at least so far this Wednesday), it makes sense that Bank of Queensland and Bendigo Bank shares are rising by more than the big four banks today.

The post Why are the smaller ASX 200 banks rebounding so strongly on Wednesday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in National Australia Bank and Bank of Queensland. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool Australia has recommended Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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