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.
Yellen: US banking system ‘sound’ after two collapses in one week
Treasury Secretary Janey Yellen is speaking to the Senate Finance Committee. She began her remarks with an update on the recent developments in the banking system.
This week the government took decisive and forceful actions to stabilize and strengthen public confidence in our financial system.
First, we worked with the Federal Reserve and FDIC to protect all depositors of the two failed banks. On Monday morning customers were able to access all of the money in their deposit accounts, so they could make payroll and pay the bills. Shareholders and debt holders are not being protected by the government. Importantly, no taxpayer money is being used or put at risk with this action deposit protection is provided by the Deposit Insurance Fund, which is funded by fees on banks.
Second, the Federal Reserve is providing additional support to the banking system with the new lending facility. This will help financial institutions meet the needs of all of their depositors.
I can reassure the members of the committee that our banking system is sound, and that Americans can feel confident that their deposits will be there when they need them. This week’s actions demonstrate our resolute commitment to ensure that our financial system remains strong, and that depositors’ savings remained safe.
First Republic Bank considering sale, report says
According to reporting by Bloomberg, US regional lender First Republic Bank is considering a sale among other options. The outlet cites people familiar with knowledge of the matter.
The San Francisco-headquartered lender could attract interest from larger banks should a sale go ahead. Other options being explored include ways to boost liquidity.
On Wednesday, S&P Global and Fitch cut First Republic’s credit rating to junk status over concerns depositors could pull funds from the lender in a bank run similar to that which occurred at Silicon Valley Bank.
“We believe the risk of deposit outflows is elevated at First Republic Bank despite the actions of federal banking regulators and the bank actively increasing its borrowing availability to mitigate risk associated with the bank failures over the last week,” S&P Global Ratings analysts Nicholas Wetzel and Rian Pressman wrote.
Since the tech-heavy Santa Clara-based Silicon Valley Bank collapsed last Friday, First Republic has assured customers of its own liquidity. The bank said on Sunday it is getting $70bn of additional funding from the Federal Reserve and JP Morgan Chase.
First Republic’s share price is down 82.6 per cent year-to-date.
Wall Street falls on opening
Stocks on Wall Street fell again on Thursday as regional banks once again felt the brunt of fears of a banking crisis in the US and Europe.
The Dow Jones Industrial Average was down 243 points (0.8%) but recovered some of those losses in the first 30 mins of trading. The S&P 500 lost 0.5% and the Nasdaq Composite dropped 0.4%.
Despite news that embattled Credit Suisse will borrow up to $54bn from the Swiss National Bank to assure short-term liquidity, fears persist on Wall Street that an impending crisis remains a possibility and that the sector is not yet out of the woods.
The closures of Silicon Valley Bank and Signature Bank over the weekend have drawn bank stocks into sharp focus this week as investors fear contagion to the rest of the industry.
European Central Bank hikes rates despite bank turmoil
The European Central Bank has announced a further rate hike of 50 basis points, despite turmoil in banking stocks.
Here’s the moment the announcement broke on CNBC:
Bank turmoil casts shadow over Europe interest rate decision
European Central Bank President Christine Lagarde said last week that a big interest rate increase was “very likely” at Thursday’s meeting. That was before Silicon Valley Bank collapsed in the U.S. and European bank shares plunged as fears spread of more widespread troubles at a time when banks are adjusting to rapidly rising interest rates.
Markets are watching to see if the ECB will stick to its path of steep rate increases aimed at fighting inflation or dial back to a quarter-point hike.
Lagarde and the ECB have not made a public statement on the recent banking upheaval, including a stock plunge from major Swiss lender Credit Suisse and its move for financing from the Swiss central bank this week. ECB officials typically observe a silent period a week before a rate decision to avoid excessive market swings and speculation based on officials’ comments.
More on this story here:
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.
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2023-03-16 11:51:04Z
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