Credit Suisse to borrow €51 billion from Swiss central bank
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The US banking system remains sound and Americans can feel confident that their deposits will be there when needed, treasury Secretary Janet Yellen will tell the Senate Finance Committee later today.
In remarks prepared for a budget hearing, Yellen said “decisive and forceful” actions taken this week by the US government to shore up public confidence in the banking system after the collapse of Silicon Valley Bank underscored its resolve to protect depositors.
It comes after Credit Suisse shares shot up by more than 30 per cent as trading opened in Zurich on Thursday after turning to the central bank in a bid to temper fears over its finances.
It was announced last night that the lender would borrow up to 50bn Swiss francs (£44bn) from the Swiss National Bank to strengthen its liquidity.
The troubled banking giant said it was taking decisive action to shore up its finances after its shares nosedived 30 per cent on Wednesday.
Shares in the Swiss bank plummeted after its top shareholder Saudi National Bank said it would not provide any further financial assistance. However, Swiss regulators announced that the country’s central bank would give Credit Suisse liquidity if needed, helping mitigate earlier concerns.
ICYMI | Biden says no losses will be borne by taxpayers
Joe Biden has reassured Americans that the nation’s banking system is “safe” after the collapse of Silicon Valley Bank and Signature Bank.
The US president also said that “no losses will be borne by the taxpayers” and “instead the money will come from the fees that banks pay into the deposit insurance fund.”
“Americans can have confidence that the banking system is safe,” Mr Biden said.He added that the management of the collapsed banks would be “fired”.
Watch here.
‘No losses’ will be borne by taxpayers after Silicon Valley Bank collapse, Biden says
Joe Biden has reassured Americans that the nation’s banking system is “safe” after the collapse of Silicon Valley Bank and Signature Bank. The US president also said that “no losses will be borne by the taxpayers” and “instead the money will come from the fees that banks pay into the deposit insurance fund.” “Americans can have confidence that the banking system is safe,” Mr Biden said, addressing the nation on Monday (13 March). He added that the management of the collapsed banks would be “fired”. Click here to sign up for our newsletters.
NY bank’s demise: Contagion or a problem with the business?
Signature Bank’s collapse came stunningly fast, leaving behind the question of whether there was a fundamental flaw in the way it did business — or if it was just a victim of the panic that spread after the failure of Silicon Valley Bank.
There were few outward signs that Signature Bank was crumbling before the New York Department of Financial Services on Sunday seized the bank’s assets and asked the Federal Deposit Insurance Corp. take over its operations.
The FDIC will run it as Signature Bridge Bank until it can be sold.
But leading up the takeover, there were calls on social media warning depositors to get their funds out of the bank — and those were followed with a real-life frenzy of withdrawals. There hasn’t yet been a public accounting of exactly how much money was withdrawn from the bank with a history of being friendlier than most in the US to the cryptocurrency industry.
Read more here.
Asian stocks slide
Asian stocks tumbled today and investors bought gold, bonds and the dollar as fear of a banking crisis was reignited by fresh troubles at Credit Suisse.
Japan’s Nikkei fell 2 per cent in early trade. Australian shares slumped 2 per cent as well, led by losses for banking stocks, while miners dropped heavily too as the spectre of worldwide banking stress has traders getting out of all kinds of growth-sensitive assets.
Hang Seng futures were down 2 per cent.
Oil has slumped to 15-month lows. Gold touched a six-week high overnight. In New York the S&P 500 fell 0.7 per cent but the focus was on banks and in Europe where Credit Suisse shares crashed 30 per cent to a record low after its biggest shareholder, Saudi National Bank, said it could not provide further financial help.
Banking crisis fears intensify as shares in top lenders plunge
Shares in top European banks have plunged as concerns over weaknesses in the global banking sector intensify, prompting fears of another “2008-style” financial crisis.
The sell-off of banking stocks took a turn for the worse yesterday, leading to reports that some major shares had been temporarily suspended.
Swiss bank Credit Suisse was driving the panicked mood after one of its top investors, Saudi National Bank, said it could not increase its stake in the struggling lender.
It led to sharp falls in the share price of other big banks, with London-listed Barclays plunging by more than 8 per cent, and European banks like Societe Generale and BNP Paribas showing losses of around 10 per cent.
Read more here.
Yellen tells senators US banking system ‘remains sound’
The US banking system remains sound and Americans can feel confident that their deposits will be there when needed, treasury Secretary Janet Yellen will tell the Senate Finance Committee later today.
In remarks prepared for a budget hearing, Yellen said “decisive and forceful” actions taken this week by the US government to shore up public confidence in the banking system after the collapse of Silicon Valley Bank underscored its resolve to protect depositors.
“I can reassure the members of the committee that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them,” Yellen said in the remarks.
“This week’s actions demonstrate our resolute commitment to ensure that depositors’ savings remain safe.”
She made no reference in the prepared remarks to the situation surrounding Credit Suisse, which saw its shares plunge on Wednesday before regulators pledged a liquidity lifeline to the flagship Swiss lender.
Tough decisions ahead for the Federal Reserve
The Federal Reserve is facing stinging criticism for missing what observers say were clear signs that Silicon Valley Bank was at high risk of collapsing into the second-largest bank failure in US history.
The Fed was the primary federal supervisor of the bank based in Santa Clara, California, that failed last week. The bank was also overseen by the California Department of Financial Protection and Innovation.
Critics point to many red flags surrounding Silicon Valley Bank, including its rapid growth since the pandemic, its unusually high level of uninsured deposits and its many investments in long-term government bonds and mortgage-backed securities, which tumbled in value as interest rates rose.
Nasdaq futures rise
Nasdaq futures rose on Thursday as the Swiss central bank’s lifeline for Credit Suisse calmed global markets.
US-listed shares of Credit Suisse rose 3 per cent in premarket trading, after the bank secured a credit line of up to $54 billion from the Swiss National Bank to shore up liquidity and investor confidence, which had nosedived after the lender’s shares slumped on Wednesday.
Wall Street’s main indexes were under severe selling pressure in the previous session after troubles at Credit Suisse reignited fears of a banking crisis, which had eased following emergency measures by U.S. authorities after the collapse of SVB Financial and Signature Bank.
“We believe fears about bank solvency are overdone, and most banks retain strong liquidity positions,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note.
“But tight funding conditions can still pose a challenge for a small number of individual banks, and sector profitability faces headwinds more broadly.”
Sunak has much to do to stem the flow of London stocks to New York
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Deadline given for SVB and Signature Bank bids, reports suggest
Banks interested in acquiring Silicon Valley Bank and Signature Bank must submit bids by 17 March, people familiar with the matter have told Reuters.
It is the second attempt of the US Federal Deposit Insurance Corp (FDIC) at selling SVB after a failed effort on Sunday.
Reuters adds:
The FDIC is aiming to sell both SVB and Signature in their entirety, while offers for parts of the banks could be considered if whole company sales do not happen, two of the sources said.
Only bidders with an existing bank charter will be allowed to study the banks’ financials ahead of submitting their offer, a move which is aimed at giving traditional lenders an advantage over private equity firms, the two sources said.
Any buyer of Signature must agree to give up all the crypto business at the bank, the two sources added.
Jeremy Hunt ‘encouraged’ by efforts to boost Credit Suisse liquidity
Chancellor Jeremy Hunt said he welcomed efforts to boost the liquidity of Credit Suisse, with its share price drop sparking fresh fears about the health of financial institutions.
The UK chancellor told Times Radio: “All I will say is of course I monitor what is going on in the markets, the Bank of England governor monitors carefully what is going on; he keeps me informed. I think the news we have heard from the Swiss authorities overnight is welcome.”
Earlier, Mr Hunt told Sky News he was monitoring developments “very closely” and said the news from the Swiss authorities was “encouraging”.
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2023-03-16 11:15:56Z
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