First Republic: Wall St pledges billions to rescue California bank as Credit Suisse lifted by liquidity line
Larger US banks have agreed to deposit $30bn in San Francisco-based First Republic Bank as a sign of confidence in the banking system.
A consortium of Bank of America, Wells Fargo, Citigroup, and JP Morgan will deposit approximately $20bn, while Goldman Sachs and Morgan Stanley will deposit another $5bn, and Truist, PNC, US Bancorp, State Street, and Bank of New York Mellon will deposit around $1bn each.
On Thursday morning, Treasury Secretary Janet Yellen told the Senate Finance Committee that the US banking system remains sound and Americans can feel confident that their deposits will be there when needed.
In remarks at 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.
Meanwhile, troubled Swiss bank Credit Suisse saw its shares jump 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. The lender would borrow up to 50bn Swiss francs (£44bn, $54bn) from the Swiss National Bank to strengthen its liquidity.
Key Points
Dow closes up 370 points as Wall St banks step to aid First Republic
11 banks to deposit $30bn in First Republic
Yellen says US banking system ‘remains sound’ and Americans should be ‘confident’
DOJ and SEC to probe stock sales ahead of Silicon Valley Bank collapse, report says
‘Rapid deterioration’ of operating environment sees Moody’s cut US banking outlook
Big US banks benefit from surge in deposits
21:50 , Oliver O'Connell
The collapse of Silicon Valley Bank and Signature Bank has sent some customers rushing to pull their money out of smaller banks, which has resulted in a windfall of new deposits for larger institutions.
Wells Fargo, Citigroup and Bank of America have all reported significant increases in deposits since SVB collapsed last week, CNN reports, citing sources familiar with the figures.
Graig Graziosi reports.
Big US banks benefit from surge in deposits after SVB and Signature Bank collapses
Meanwhile, here’s how the trading day unfolded in London
21:20 , Oliver O'Connell
London’s top shares faced a rollercoaster session on Thursday, with traders sending the FTSE 100 up and down throughout the day, but despite turbulent trading it managed to close on a high.
Coming off the index’s worst day for three years on Wednesday amid worries over the future of banking giant Credit Suisse, Thursday trading was highly erratic.
The top tier index initially gained ground, looking set for a rebound as trading opened after Swiss authorities extended a £45 billion emergency loan to the under-pressure bank.
But through the day it was knocked around like a yo-yo, at one point even dipping into negative territory. By the end of the day it had gained 0.9%.
Read on:
Market turmoil calms after Credit Suisse gets £45bn loan
Premium: Cracks exposed in global banking system – but this isn’t a 2008 rerun yet
20:45 , Oliver O'Connell
James Moore writes:
It’s been a case of lather, rinse, repeat in banking this week, with with the collapse of Silicon Valley Bank followed by a much bigger crisis in the form of Credit Suisse.
Mid-sized SVB was more systemically significant than many had assumed, raising big questions about US oversight.
But there was never any doubt about the dangers from a stricken Credit Suisse, a pillar of the Swiss banking establishment and a (shaky) member of the top table.
Read on:
Cracks exposed in global banking – but this isn’t a 2008 rerun yet
Elizabeth Warren: GOP gave Fed chairman ‘flamethrower that he aimed at the banking rules’
20:30 , Oliver O'Connell
Senator Elizabeth Warren slammed a 2018 piece of legislation that deregulated the financial industry as contributing to the collapse of Silicon Valley Bank.
The Massachusetts Democrat and longtime critic of the financial industry made the remarks during a Senate Finance Committee hearing with Treasury Secretary Janet Yellen.
Eric Garcia has the full story.
Warren says Republicans handed Fed chairman ‘flamethrower’ aimed at banking rules
Dow closes up 370 points as Wall St banks step to aid First Republic
20:19 , Oliver O'Connell
Wall Street’s main indexes rebounded strongly on Thursday after news and then confirmation that some of the US’s largest financial institutions were coming to the aid of First Republic Bank.
The banks have agreed to deposit $30bn in First Republic Bank to demonstrate confidence in the US banking system.
Bank of America, Wells Fargo, Citigroup and JPMorgan Chase will contribute about $5bn each, while Goldman Sachs and Morgan Stanley will deposit approximately $2.5bn, the banks said in a news release.
Truist, PNC, U.S. Bancorp, State Street, and Bank of New York Mellon will deposit around $1bn each.
The Dow Jones Industrial Average index went up 371.98 points, or 1.17%, to close at 32,246.55 points. The S&P 500 added 1.76% to close at 3,960.34. The Nasdaq Composite increased by 2.48% to 11,717.28.
11 banks to deposit $30bn in First Republic
19:56 , Oliver O'Connell
A group of financial institutions has agreed to deposit $30 billion in First Republic to demonstrate confidence in the US banking system, the banks announced on Thursday afternoon.
Bank of America, Wells Fargo, Citigroup and JPMorgan Chase will contribute about $5bn each, while Goldman Sachs and Morgan Stanley will deposit approximately $2.5bn, the banks said in a news release.
Truist, PNC, U.S. Bancorp, State Street, and Bank of New York Mellon will deposit around $1bn each.
Powell, FDIC Chairman Gruenberg and Acting Currency Comptroller Hsu. (2/2)
— Steve Herman (@W7VOA) March 16, 2023
London market recovers some lost ground, but remains depressed
19:45 , Oliver O'Connell
Shares in the FTSE 100 managed to regain some of their lost ground on Thursday after a yo-yo session which saw the index fluctuate as much as 130 points between its high and low point.
The bounce-back helped the index jump to 7,410 by the end of the day, a rise of 65.58 points or 0.9% after Swiss authorities agreed an emergency £45 billion loan with Credit Suisse overnight.
But it was far from enough to regain the losses from Wednesday, when the FTSE had its worst single day of trading in three years – since the early days of the Covid-19 pandemic.
Read more:
FTSE recovers some lost ground, but remains depressed amid global jitters
What’s at stake if Credit Suisse goes bust?
19:15 , Oliver O'Connell
Thomas Kingsley breaks down how the Swiss lender and investment bank got into its current position and whether we should be worried.
What happened to Credit Suisse and what’s at stake if it goes bust?
Signature Bank’s rapid collapse stunned the industry — what happened?
18:45 , Oliver O'Connell
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 to take over its operations. The FDIC will run it as Signature Bridge Bank until it can be sold.
But leading up to the takeover, there were calls on social media warning depositors to get their funds out of the bank — and those were followed by 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:
NY bank's demise: Contagion or a problem with the business?
More details on big US banks possibly bolstering First Republic
18:22 , Oliver O'Connell
Per CNBC:
A group of financial institutions are in talks to deposit $30bn in First Republic in what’s meant to be a sign of confidence in the banking system, sources told CNBC’s David Faber.
The deal is not done yet, the sources said, and the amounts were a moving target. The plan does not call for an acquisition of First Republic.
Bank of America, Wells Fargo, Citigroup and JPMorgan Chase will contribute about $5bn apiece, while Goldman Sachs and Morgan Stanley will deposit around $2.5bn, the sources said. Truist, PNC, US Bancorp, M&T Bank and Capital One will deposit about $1bn each.
AP Factcheck: Are ‘woke’ policies linked to bank’s demise
18:15 , Oliver O'Connell
As Wall Street reels from the swift demise of Silicon Valley Bank — the biggest American bank failure since the 2008 financial meltdown — some social media users are honing in on a single culprit: its socially aware, or “woke,” agenda.
But the Santa Clara-based institution’s professed commitment to diversity, equity and inclusion, or DEI, wasn’t a driver of the bank’s collapse, say banking and financial experts. Its poor investment strategies and a customer base prone to make devastating bank runs were.
Here’s a closer look at the facts.
FACT FOCUS: Claims link ‘woke’ policies to bank’s demise
Credit Suisse shares rebound but doubters remain
18:00 , Oliver O'Connell
Credit Suisse shares rebounded on Thursday after getting a lifeline from the Swiss central bank to shore up investor confidence but the rally lost ground against a febrile backdrop.
The Swiss bank’s announcement that it would make use of a $54bn loan from the Swiss National Bank helped stem heavy selling in financial markets on Thursday and prompted a modest rally in European equities.
Some in the market welcomed the news, others were cautious. JP Morgan analysts said the loan from the SNB would not be enough to soothe investor concerns and the “status quo was no longer an option”, leaving a takeover of Credit Suisse as the most likely outcome.
Last week’s collapse of two regional US banks has raised made investors and bank customers worry about the resilience of the financial system in the face of rising global interest rates.
Reuters
Lacking insight and loving a buzzword, GOP claims ‘woke banks’ to blame
17:45 , Oliver O'Connell
For months, right-wing media figures and Republican elected officials have blamed a “woke” agenda for what they perceive is the collapse of American institutions, from its schools and workplaces to the banks that facilitate their businesses.
The historic failure of Silicon Valley Bank is likely the result of a host of compounded factors that have nothing to do with so-called “wokeness,” from Donald Trump-era cuts to regulations that were put in place during the last financial crisis to the bank’s untenable concentration in an explosion of venture capital firms and tech startups as it careened into reality, rising interest rates and panic.
Yet Republican lawmakers have continued to return to their catch-all scapegoat – using “woke” as an umbrella term for anything related to diversity, progressive political platforms, LGBT+ inclusivity, antiracism initiatives or environmental activism – while advancing a nationwide legislative agenda singularly devoted to its destruction.
Alex Woodward reports.
Republicans blame ‘wokeness’ for Silicon Valley Bank’s collapse
Senior Democrats hand back Silicon Valley Bank donations
17:15 , Oliver O'Connell
Top Democrats in Congress are vowing to return campaign contributions tied to Silicon Valley Bank (SVB), the tech industry lender which failed last week after a bank run and was temporarily taken over by federal legislators.
Josh Marcus has the details.
Democrats hand back Silicon Valley Bank donations following bank’s collapse
What is happening to banks and why are people talking about a crisis?
16:45 , Oliver O'Connell
Global banks have been in the eye of the storm this week, with fears growing over the stability of the banking sector and some likening the current situation to the 2008 financial crash.
Two events have fuelled the sense of panic. First, the collapse of Silicon Valley Bank in the US, and second, the woes at Swiss bank Credit Suisse that led it to take a £45 billion emergency loan from the central bank.
But how are these events linked and should we be worried?
Anna Wise reports.
What is happening to banks and why are people talking about a crisis?
Full story: Yellen says US banking system ‘remains sound’ and Americans should be ‘confident’
16:15 , Oliver O'Connell
Treasury Secretary Janet Yellen on Thursday told the Senate Finance Committee that the US banking system is “sound” and Americans can feel “confident” about their deposits in the wake of the second-largest bank collapse in America’s history late last week.
Speaking at the outset of a hearing to examine President Joe Biden’s budget request for the Treasury during the next fiscal year — the first appearance by an administration official at the Capitol since Mr Biden said the Federal Deposit Insurance Corporation would protect uninsured money at Silicon Valley Bank and Signature Bank, a move that some observers have criticised as a “bailout” — Ms Yellen said the decision showed the administration’s “resolve” to maintain Americans’ confidence in the US financial system.
Here’s the latest from Capitol Hill:
Janet Yellen says US banking system ‘remains sound’ and Americans can be ‘confident’
Big banks rallying around First Republic, report says
15:58 , Oliver O'Connell
More details have emerged of a plan to shore up First Republic Bank, The Wall Street Journal reports.
The largest banks in the US, including JPMorgan Chase are discussing a joint rescue of the San Francisco-based lender including a sizable capital infusion.
Citing people familiar with the details, the Journal reports that JPMorgan is working with Citigroup, Bank of America, and Wells Fargo to put together a lifeline for the bank.
The same people said that Morgan Stanley, Goldman Sachs, US Bancorp, and PNC Financial Services are also involved.
A deal may be made public as soon as today, though there is no certainty yet as to what the final package may look like and regulator approval would be required.
Deadline given for SVB and Signature Bank bids, reports suggest
15:45 , Oliver O'Connell
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.
Earlier: European markets regain poise
15:25 , Oliver O'Connell
London’s FTSE 100 Index has rebounded after suffering its worst one-day performance since the start of the pandemic amid hopes a £45 billion emergency loan for Credit Suisse will calm fears over a banking crisis.
The top tier rose 0.7%, up 50.1 points to 7394.6, in morning trading as banking stocks regained their poise following hefty declines, which saw the FTSE 100 close 3.8% lower on Wednesday.
The deepening crisis at Credit Suisse, just days after Silicon Valley Bank and Signature Bank collapsed in the US, has sparked fears the banking sector is heading for a full-blown crisis.
Holly Williams reports.
European markets regain poise as Credit Suisse emergency loan calms bank fears
Is a takeover of Credit Suisse on the cards?
15:00 , Oliver O'Connell
With speculation about the possible sale of First Republic Bank in California, what about the future of Credit Suisse?
Per Reuters:
Credit Suisse shares jumped over 20% on Thursday after the company secured a lifeline from the Swiss central bank to shore up investor confidence, though some analysts said the market relief could be shortlived.
The Swiss bank's announcement that it would make use of a $54-billion loan from the Swiss National Bank helped stem heavy selling in financial markets in Asia on Thursday and prompted a modest rally in European equities.
While many in the market cheered the news, others were cautious. JPMorgan analysts said the loan from the SNB would not be enough to soothe investor concerns and the "status quo was no longer an option", leaving a takeover of Credit Suisse as the most likely outcome.
Watch: Yellen remarks to Senate committee
14:43 , Oliver O'Connell
.@SecYellen: "I can reassure the members of the committee that our banking system is sound and that Americans can feel confidant that their deposits will be there when they need them." pic.twitter.com/EEgc1S4esu
— CSPAN (@cspan) March 16, 2023
.@SecYellen: "This week the government took decisive and forceful actions to stabilize and strengthen public confidence in our financial system." pic.twitter.com/9zYIEuLLg8
— CSPAN (@cspan) March 16, 2023
Yellen: US banking system ‘sound’ after two collapses in one week
14:35 , Oliver O'Connell
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
14:24 , Oliver O'Connell
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
14:07 , Oliver O'Connell
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
13:26 , Oliver O'Connell
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:
BREAKING: The European Central Bank announced a further rate hike of 50 basis points, despite turmoil in banking stocks. @steveliesman reports. https://t.co/yL6KXt8vcb pic.twitter.com/HSv87mKCUL
— CNBC (@CNBC) March 16, 2023
Bank turmoil casts shadow over Europe interest rate decision
13:15 , Emily Atkinson
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:
Bank turmoil casts shadow over Europe interest rate decision
ICYMI | Biden says no losses will be borne by taxpayers
12:45 , Alisha Rahaman Sarkar
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
NY bank’s demise: Contagion or a problem with the business?
12:15 , Alisha Rahaman Sarkar
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.
NY bank's demise: Contagion or a problem with the business?
Asian stocks slide
11:45 , Alisha Rahaman Sarkar
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.
(Reuters)
Banking crisis fears intensify as shares in top lenders plunge
11:15 , Alisha Rahaman Sarkar
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.
Banking crisis fears intensify as shares in top lenders plunge
Yellen tells senators US banking system ‘remains sound’
11:06 , Emily Atkinson
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
10:45 , Oliver O'Connell
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.
Fed, under criticism for bank failure, faces tough decisions
Nasdaq futures rise
10:30 , Emily Atkinson
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
10:15 , Alisha Rahaman Sarkar
As two major firms leave the City, it’s essential the government shows a better understanding of big business, writes Chris Blackhurst.
Sunak has much to do to stem the flow of London stocks to New York
Deadline given for SVB and Signature Bank bids, reports suggest
09:50 , Emily Atkinson
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
09:35 , Adam Forrest
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”.
Lawmaker goes viral with video explanation of Silicon Valley Bank’s collapse
09:15 , Oliver O'Connell
A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.
North Carolina Democrat Jeff Jackson, originally from Chapel Hill, was elected to the US House of Representatives for the state’s 14th District in 2022.
At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.
Read on:
North Carolina lawmaker’s video explanation of the SVB collapse earns praise online
Share price rises after £44bn bailout from Swiss national bank
09:07 , Emily Atkinson
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.
FTSE 100 hit by worst day since Covid
08:15 , Alisha Rahaman Sarkar
Fears the global economy might be hit by a fresh banking crisis wiped billions of pounds off the value of top firms yesterday during growing uncertainty over the future of troubled Credit Suisse.
Jitters spread through global markets as shares in the struggling Swiss lender crashed to a record low, dragging London’s FTSE 100 down 3.8 per cent.
It closed at 7,344 points, more than wiping out the gains that the index has made since the beginning of the year. It was a bigger one-day decline than last year’s mini-Budget and the day that Russia launched the full-scale invasion of Ukraine.
Alastair Jamieson reports.
Stock market hit by worst day since Covid amid fears of new banking crisis
How Washington reacted to the Silicon Valley Bank failure
07:15 , Oliver O'Connell
There was a frenetic weekend of nonstop briefings with regulators, lawmakers, administration officials and President Joe Biden himself about how to handle the demise of the nation’s 16th-biggest bank and a go-to financial institution for tech entrepreneurs. At the core of the problem was tens of billions of dollars — including money companies needed to meet payrolls — sitting in Silicon Valley Bank accounts that were not protected by federal deposit insurance that only goes up to $250,000.
Something needed to be done, federal officials agreed, before Asian stock markets opened Sunday evening and other banks faced the potential for waves of panicked withdrawals Monday morning.
Here’s how it unfolded:
Washington reacts on the fly to Silicon Valley Bank failure
Gold rallies over 1% after Credit Suisse crash
06:15 , Alisha Rahaman Sarkar
Gold prices climbed over 1 per cent to their highest since early February as a fresh crisis in the banking sector turned investors away from seemingly riskier assets.
Spot gold jumped 1.2 per cent to $1,924.63 per ounce. The US gold futures gained 1.1 per cent to settle at $1,931.30.
Gold prices in sterling hit a record high while bullion in euros also spiked towards all-time peaks hit last year.
“People are going to the US Treasuries, gold, silver, and the dollar. They’re exiting riskier assets like US equities and economically-sensitive metals like copper, platinum and palladium,” Phillip Streible, chief market strategist at Blue Line Futures in Chicago, told Reuters.
Premium: Has enough been done to calm Wall Street over the banking crisis?
05:15 , Oliver O'Connell
James Moore wrote this week:
Just what we needed right now: another banking crisis. But after the bloodbath at the beginning of the week, a rally quickly got underway. Regional banks in the United States – in real danger of experiencing a run on their deposits while larger rivals benefit from inflows – found some support.
Perhaps Wall Street’s nail-biters had worked out that the doomed Silicon Valley Bank (SVB) had a rather unique financial and client structure. Ditto New York-based lender Signature, which shut down over the weekend. Interventions by the US Federal Reserve do seem to have helped calm nerves.
Has enough been done to calm Wall Street over the banking crisis?
Credit Suisse to borrow up to £44.5bn
04:56 , Alisha Rahaman Sarkar
Credit Suisse is planning to borrow up to £44.5bn from Switzerland’s central bank in a bid to boost its liquidity and calm investors.
Credit Suisse plunged and dragged down other major European lenders in the wake of bank failures in the US.
The lender’s stock dropped about 30 per cent, to about £1.42, before clawing back to a 24 per cent loss at £1.51 at the close of trading on the SIX stock exchange.
At its lowest, the price was down more than 85 per cent from February 2021.“This additional liquidity would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs,” the bank said.
Credit Suisse said the borrowing will be made under the covered loan facility and a short-term liquidity facility, and it will be collateralised by high quality assets.
Bank runs now happen at speed of social media
02:50 , Oliver O'Connell
A bank run conjures images of “It’s a Wonderful Life,” with anxious customers crammed shoulder to shoulder, desperately pleading with a harried George Bailey to hand over their money.
The failure of Silicon Valley Bank last week had the panic but few other similarities, instead taking place on Twitter, message boards, cell phones and bank websites.
What made the failure of Silicon Valley Bank unique compared to past failures of large banks was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise fresh capital; by Friday morning it was insolvent and under government control.
Read more:
Bank runs used to be slow. The digital era sped them up
Why did Silicon Valley Bank collapse?
00:50 , Oliver O'Connell
The collapse of the 16th largest bank in the US sent ripples through global markets on Monday as governments and businesses scrambled to figure out what the impact would be and how it could be contained.
Silicon Valley Bank collapsed on Friday after failing to raise new capital last week.
On Monday, the UK government said that HSBC would take over the UK wing of the bank.
But what was SVB, why did it collapse, and are other banks at risk? We examine these questions here.
Why did Silicon Valley Bank collapse and are other lenders at risk?
Worst one-day performance for London stockmarket since start of Covid pandemic
Wednesday 15 March 2023 22:50 , Oliver O'Connell
Fears that the economy might be on the edge of another “2008-style crisis” caused shares in top European banks to plunge and dragged London’s FTSE 100 down to its lowest level this year.
Troubled bank Credit Suisse saw its share price drop by as much as a quarter to a new record low, causing its shares to be temporarily suspended on the Swiss market.
Investors were shaken by the collapse of Silicon Valley Bank (SVB) in the US over the weekend, sparking concerns about the viability of the “too big to fail” Credit Suisse.
London stock market suffers heavy losses as banking crisis fears intensify
Dow Jones closes 280 points lower, dogged by fears for future of Credit Suisse
Wednesday 15 March 2023 20:50 , Oliver O'Connell
The Dow Jones Industrial Average closed 280 points (0.87%) lower on Wednesday, dogged by concerns over the future of Credit Suisse, which has a large US and international presence beyond its home base in Switzerland.
The S&P ended the day down 0.7% at 3,891.97, and the Nasdaq Composite managed to creep up 0.05% at 11,434 by the close of trading.
At one point the Dow was down 725 points and the S&P briefly saw all of this year’s gains erased.
There was something of a rebound in the afternoon when Swiss regulators announced that the country’s central bank would give Credit Suisse liquidity if needed, helping mitigate earlier concerns when it was reported by Reuters that Saudi National Bank, the institution’s largest investor, said it couldn’t provide further funding.
Credit Suisse had earlier said it had found “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.
Fears over the future of the bank stem from the crisis that emerged in US regional banks following the collapse of Silicon Valley Bank and Signature Bank over the weekend.
Credit Suisse shares sink as key investor vows no more help
Wednesday 15 March 2023 20:30 , Oliver O'Connell
Battered shares of Credit Suisse lost more than one-quarter of their value Wednesday, hitting a record low after its biggest shareholder — the Saudi National Bank — told outlets that it would not inject more money into the ailing Swiss bank.
The turmoil in the Credit Suisse stock price prompted an automatic pause in trading of the bank’s shares on Switzerland’s market and brought down shares of other European banks by as much as double digits. That fanned new fears about the health of financial institutions in the wake of the collapse of Silicon Valley Bank in the United States and worries about midsized lenders.
Credit Suisse stock was down more than 27% at around 1.6 Swiss francs in mid-afternoon trading on the SIX stock exchange Wednesday. That’s down more than 85% from February 2021.
Credit Suisse shares sink as key investor vows no more help
Bank runs now happen at speed of social media
Wednesday 15 March 2023 19:50 , Oliver O'Connell
A bank run conjures images of “It’s a Wonderful Life,” with anxious customers crammed shoulder to shoulder, desperately pleading with a harried George Bailey to hand over their money.
The failure of Silicon Valley Bank last week had the panic but few other similarities, instead taking place on Twitter, message boards, cell phones and bank websites.
What made the failure of Silicon Valley Bank unique compared to past failures of large banks was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise fresh capital; by Friday morning it was insolvent and under government control.
Read more:
Bank runs used to be slow. The digital era sped them up
Lawmaker’s praised for viral video explanation of Silicon Valley Bank’s collapse
Wednesday 15 March 2023 19:20 , Oliver O'Connell
A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.
North Carolina Democrat Jeff Jackson, originally from Chapel Hill, was elected to the US House of Representatives for the state’s 14th District in 2022.
At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.
North Carolina lawmaker’s video explanation of the SVB collapse earns praise online
Schumer: US needs strong, bipartisan legislation on banking
Wednesday 15 March 2023 19:06 , Oliver O'Connell
The United States needs “strong legislation” on banking regulation, Senate Majority Leader Chuck Schumer said on Wednesday, “hopefully” something bipartisan.
Schumer made the comments in response to a question on whether he would support legislation spearheaded by Democratic Senator Elizabeth Warren, which would reinstate banking regulations and oversight rolled back under former President Donald Trump.
He declined to say whether he would support the legislation, insisting that he has faith in President Joe Biden, Treasury Secretary Janet Yellen and the US Federal Reserve.
Reuters
Signature not targeted for crypto activities says New York senator
Wednesday 15 March 2023 18:50 , Oliver O'Connell
New York Senator Kirsten Gillibrand was asked if she had any concerns about whether Signature Bank was targeted and failed by regulators unfairly for its crypto activities.
She said no, adding that the bank appeared to have “had other stability issues”.
Former Rep Barney Frank said on Monday that he believes the state officials behind the action were trying to make an example of Signature Bank.
“This was just a way to tell people, ‘We don’t want you dealing with crypto,’” Frank told The Associated Press in a telephone interview.
Mr Frank is a board member of Signature Bank and was one of the pioneers of the landmark Dodd-Frank Act, which was enacted after the 2008 financial crisis to better insulate the banking system from shocks.
I asked Sen. Gillibrand just now if she had any concern on whether New York's Signature Bank was targeted and failed by regulators unfairly for its crypto activities.
She said no, saying the Signature appeared to have "had other stability issues"— Brendan Pedersen (@BrendanPedersen) March 15, 2023
New York’s financial regulator has pushed back on former Rep Frank’s comments, saying its decision to close Signature Bank had “nothing to do with crypto,” citing what it called “a significant crisis of confidence in the bank’s leadership” that occurred over the weekend after regulators shuttered Silicon Valley Bank.
But NYDFS denied his claims in a statement on Tuesday, saying that its decision to close Signature Bank on Sunday and appoint the Federal Deposit Insurance Corp as receiver “was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”
“The decisions made over the weekend had nothing to do with crypto. Signature was a traditional commercial bank with a wide range of activities and customers,” an NYDFS spokesperson said.
“DFS has been facilitating well-regulated crypto activities for several years, and is a national model for regulating the space,” they said.
The spokesperson added that as withdrawal requests ballooned over the weekend, Signature Bank failed to provide reliable and consistent data.
Mr Frank said he was surprised the regulator said the decision to close the bank was not related to cryptocurrency.
“I think that was a factor,” he said in an interview. “I’m puzzled as to why it was closed.”
He added that to his knowledge, bank executives were working to provide data to regulators.
“What we heard from our executives is that the deposit situation had stabilised and they would be getting the capital from the discount window and I continue to be convinced that if we had opened on Monday given the announcements of those two policies, we would have been in a reasonably good shape and certainly functional,” he said.
With reporting from Reuters
Worst one-day performance of London stock market since start of Covid pandemic
Wednesday 15 March 2023 18:35 , Oliver O'Connell
Fears that the economy might be on the edge of another “2008-style crisis” caused shares in top European banks to plunge and dragged London’s FTSE 100 down to its lowest level this year.
Troubled bank Credit Suisse saw its share price drop by as much as a quarter to a new record low, causing its shares to be temporarily suspended on the Swiss market.
Investors were shaken by the collapse of Silicon Valley Bank (SVB) in the US over the weekend, sparking concerns about the viability of the “too big to fail” Credit Suisse.
Anna Wise reports on today’s market activity.
London stock market suffers heavy losses as banking crisis fears intensify
Watch: SenatorJohn Kennedy says fed intervention at SVB was ‘bailout’
Wednesday 15 March 2023 18:10 , Oliver O'Connell
“You can put perfume on a pig, but it still smells like a pig.”
“You can put perfume on a pig, but it still smells like a pig.”
— Sen. John Kennedy (R-LA) argues President Biden insuring depositors at Silicon Valley Bank and Signature Bank was a “bailout” pic.twitter.com/AqETPEQhtG— The Recount (@therecount) March 15, 2023
Gallego takes aim at Sinema over 2018 bank deregulation vote
Wednesday 15 March 2023 17:45 , Oliver O'Connell
Democratic Rep Ruben Gallego slammed independent Sen. Kyrsten Sinema of Arizona on Tuesday for backing a bank deregulation bill he says contributed to the collapse of Silicon Valley Bank, highlighting Sinema’s Wall Street ties as he campaigns for her seat.
The contrast over the 2018 legislation feeds Gallego’s push to portray Sinema as a friend of powerful interests, a central theme of the Senate campaign he launched in January.
“It’s not like we received different information. We got the same pitches as all the members of Congress,” Gallego told reporters outside Silicon Valley Bank’s offices in Tempe. “But when push came to shove, and the vote came to the floor, I voted to protect Arizona and she voted to protect Wall Street.”
Gallego slams Sinema over 2018 bank deregulation vote
Treasury officials reviewing US exposure to Credit Suisse, report says
Wednesday 15 March 2023 17:30 , Oliver O'Connell
TREASURY officials are actively reviewing the US financial sector’s exposure to Credit Suisse, people familiar tell @SalehaMohsin @v_dendrinou, on @TheTerminal
US officials are working closely with European regulators.— Kate Davidson (@KateDavidson) March 15, 2023
The US Treasury is monitoring the situation surrounding Credit Suisse and is in touch with global counterparts about it, a Treasury spokesperson said on Wednesday as the bank came under renewed market pressures after a major shareholder ruled out providing new capital.
Asked about Treasury’s involvement in the Credit Suisse matter, a Treasury spokesperson said in an emailed statement: “Treasury is monitoring this situation and has been in touch with global counterparts.”
Reuters
Ayanna Pressley adds voice to Warren and Porter’s call for reversal of bank regulation rollback
Wednesday 15 March 2023 17:15 , Oliver O'Connell
Congresswoman Ayanna Pressley has added her voice to growing calls for a reversal of 2018 Republican-led legislation that rolled back regulations put in place after the 2008 global financial crisis.
Rep Pressley applauds the efforts of Senator Elizabeth Warren and Rep Katie Porter in presenting a bill to do just that.
Make no mistake: the Silicon Valley Bank collapse was made possible by Republicans’ dangerous bank deregulation during the Trump era.
Congress must reverse those harmful policies, & I'm proud to join @SenWarren & @RepKatiePorter on a bill to do just that.https://t.co/54zGaqonan— Congresswoman Ayanna Pressley (@RepPressley) March 15, 2023
How the 2008 global financial crisis still fuels today’s populist politics
Wednesday 15 March 2023 16:45 , Oliver O'Connell
Mike Pence and Bernie Sanders are hardly political allies.
But in the aftermath of two large bank failures, the conservative former vice president and the democratic socialist senator are striking remarkably similar tones. Pence, a Republican, bemoaned that “we live in a world where certain politically favored businesses are propped up, backstopped and bailed out by government.” Sanders, an independent who caucuses with Democrats, said “we cannot continue down the road of more socialism for the rich and rugged individualism for everyone else.”
Their sentiment reflects the populism that has coursed through both political parties in the 15 years since shaky financial institutions last spurred anxiety about the broader economy. The 2008 financial crisis unleashed a political realignment that rejected perceived elites and establishment figures, often with unpredictable results for Democrats and Republicans alike.
Read more:
How the last banking tumult fuels today's populist politics
Dow down 660pts at lunchtime in New York
Wednesday 15 March 2023 16:30 , Oliver O'Connell
Stocks on Wall Street have fallen so far on Wednesday amid newly strengthened concerns about the financial sector as shares of Credit Suisse, which had a large US operation, fell by more than 15 per cent.
The Dow Jones Industrial Average dropped 644 points, or 1.6%. The Nasdaq Composite lost 1.1%, while the S&P 500 fell 1.8%.
The crisis in the financial sector began with US regional banks after Silicon Valley Bank and Signature Bank collapsed due to poor management decisions as the Federal Reserve continued to hike interest rates to counter inflation.
Credit Suisse was fingered as a larger possible casualty on Monday due to internal weaknesses and shares of the troubled bank fell to an all-time low.
Saudi National Bank, the bank’s largest investor, said on Wednesday it could not provide any more funding, according to a Reuters report.
Earlier this week, Credit Suisse said itt had found “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.
As Credit Suisse dragged down the banking sector in European Bank sector, so followed big US banks — Citi was down 6 per cent, Goldman Sachs 5.5 per cent, Wells Fargo 5 per cent, and Bank of America 2.5 per cent.
After a rebound on Tuesday, regional US banks also fell back in trading on Wednesday.
Elizabeth Warren laughs at concept of banks doing their own testing
Wednesday 15 March 2023 16:15 , Oliver O'Connell
Senator Elizabeth Warren laughed out loud at the concept of banks being qualified to do their own stress testing during an appearance on CNBC this morning.
Host Sara Eisen asked about the legislation Senator Warren is sponsoring to undo the Trump administration’s roll back of bank regulations put in place after the 2008 global financial crisis.
“We've had a number of those CEOs on the shows in the last few days, Fifth Third, Schwab, they do their own stress testing,” said Eisen to laughter from the senator.
“I'm sorry,” Ms Warren said. “I taught school for many, many years and I did not let my students do their own testing.”
She continued: “The testing that is meaningful is the testing that comes from the outside. And it's also the testing where you don't give the answers in advance," she continued. "The whole point of stress testing is for someone on the outside of the bank to say, hmm, what could go wrong here and to make sure that the bank could withstand those kinds of problems like a sudden increase in interest rates.”
“And for these banks to say not to worry, we're testing ourselves is truly laughable,” the senator concluded.
Watch:
What happened to Credit Suisse today?
Wednesday 15 March 2023 15:50 , Oliver O'Connell
Credit Suisse shares slumped by as much as 30% on Wednesday after its largest shareholder said it could not provide further support, prompting the Swiss bank’s CEO to make new assurances on its financial strength.
Saudi National Bank (SNB), which holds 9.88 per cent of Credit Suisse, said it would not buy more shares on regulatory grounds.
Shares in Credit Suisse, which is battling to recover from a string of scandals that have undermined the confidence of investors and clients, were down about 17 per cent in early afternoon trading, after shedding as much as 30p per cent to a new record low.
In a sign that regulatory authorities are tracking developments, European Central Bank (ECB) officials contacted lenders it supervises to ask about financial exposures to Credit Suisse, a source familiar with the matter told Reuters, confirming a Wall Street Journal report.
Meanwhile, the falls in Credit Suisse’s market value also prompted action among politicians with French Prime Minister Elisabeth Borne saying that Finance Minister Bruno Le Maire would speak with his Swiss counterpart in the coming hours.
“The Credit Suisse situation is for the Swiss authorities to deal with,” Borne said in the French Senate.
Credit Suisse CEO Ulrich Koerner moved to calm nerves, saying the bank’s liquidity base remained strong and was well above all regulatory requirements. Koerner had said earlier in the week Credit Suisse’s liquidity coverage ratio averaged 150 per cent in the first quarter of this year.
The Swiss National Bank declined to comment on the fall in shares Credit Suisse shares.
Credit Suisse on Tuesday published its annual report for 2022, which said it had identified "material weaknesses" in controls over financial reporting and had not yet stemmed customer outflow.
Switzerland’s second-biggest bank had seen fourth-quarter customer outflows rise to more than 110 billion Swiss francs ($120bn).
Exane analysts said they saw a bailout by the Swiss National Bank and financial regulator Finma, possibly with one or more other banks, as the “most likely scenario” facing Credit Suisse.
They also raised the possibility of a u-turn by Saudi National Bank, which upped its stake in Credit Suisse last year as part of a capital raise to bolster its financial strength.
“We cannot because we would go above 10 per cent. It’s a regulatory issue,” SNB Chairman Ammar Al Khudairy told Reuters on Wednesday.
Reuters
How Washington came to the rescue of US banks
Wednesday 15 March 2023 15:20 , Oliver O'Connell
After the sudden collapse of Silicon Valley Bank, California Democratic Rep. Maxine Waters started furiously working the phones to find out what was going on with the failed lender — and what would happen to its panicked depositors.
Waters, former chair of the House Financial Services Committee, had her doubts that another bank would step up as a savior and buy the defunct institution.
“Banks don’t just wake up and say: ‘Oh, there’s a problem with another significant bank and they’ve collapsed. Let’s just take it over,’’’ she said.
So began a frenetic weekend of nonstop briefings with regulators, lawmakers, administration officials and President Joe Biden himself about how to handle the demise of the nation’s 16th-biggest bank and a go-to financial institution for tech entrepreneurs. At the core of the problem was tens of billions of dollars — including money companies needed to meet payrolls — sitting in Silicon Valley Bank accounts that were not protected by federal deposit insurance that only goes up to $250,000.
Something needed to be done, federal officials agreed, before Asian stock markets opened Sunday evening and other banks faced the potential for waves of panicked withdrawals Monday morning.
Washington reacts on the fly to Silicon Valley Bank failure
Warren and Blumenthal push for SVB executives probe
Wednesday 15 March 2023 14:50 , Oliver O'Connell
Senators Elizabeth Warren and Richard Blumenthal have written to the Securities Exchange Commission and the Department of Justice pressing for an investigation into whether Silicon Valley Bank executives broke the law.
Sens. Warren & Blumenthal write to the SEC and DOJ pressing for an investigation into whether Silicon Valley Bank execs broke the law: pic.twitter.com/0O1rXmN1ys
— Andrew Solender (@AndrewSolender) March 15, 2023
Why did Silicon Valley Bank collapse and are other lenders at risk?
Wednesday 15 March 2023 14:30 , Rachel Sharp
The collapse of the 16th largest bank in the US sent ripples through global markets on Monday as governments and businesses scrambled to figure out what the impact would be and how it could be contained.
Silicon Valley Bank collapsed on Friday after failing to raise new capital last week.
But what was SVB, why did it collapse, and are other banks at risk? We examine these questions here:
Why did Silicon Valley Bank collapse and are other lenders at risk?
Democratic Rep Gallego slams Kyrsten Sinema over deregulation vote
Wednesday 15 March 2023 14:00 , Rachel Sharp
Democratic Rep. Ruben Gallego slammed independent Sen. Kyrsten Sinema of Arizona on Tuesday for backing a bank deregulation bill he says contributed to the collapse of Silicon Valley Bank, highlighting Sinema’s Wall Street ties as he campaigns for her seat.
The contrast over the 2018 legislation feeds Gallego’s push to portray Sinema as a friend of powerful interests, a central theme of the Senate campaign he launched in January.
“It’s not like we received different information. We got the same pitches as all the members of Congress,” Gallego told reporters outside Silicon Valley Bank’s offices in Tempe. “But when push came to shove, and the vote came to the floor, I voted to protect Arizona and she voted to protect Wall Street.”
A spokesperson for Sinema, Hannah Hurley, said the senator is not focused on the election and declined to respond to Gallego’s comments.
Sinema on Sunday applauded the Biden administration’s announcement that people who deposited money at the bank would have prompt access to it.
“The federal government must now ensure those responsible are held accountable, while maintaining stability for all Americans who rely on our banking system,” she said in a statement.
How much the regulatory rollback contributed to the Silicon Valley Bank failure is a matter of debate. The Federal Reserve announced Monday it will review its supervision of the bank to understand how it might have better managed its regulation. The Federal Reserve has faced stringent criticism for missing signs the bank was at risk.
Silicon Valley Bank doesn’t have branches in Arizona but has hundreds of employees working from a lakefront office in a Phoenix suburb.
Gallego said he supports the Biden administration’s intervention to protect bank customers, adding, “This could have really spiraled out of control.” He said the banking system needs new safeguards for the modern world, where fears can spread quickly through social media and people can respond instantly by moving their money electronically.
A Gallego spokesperson said he will co-sponsor legislation to repeal the 2018 rollback, which was introduced Tuesday by Sen. Elizabeth Warren, D-Mass., and Rep. Katie Porter, D-Calif.
Sinema left the Democratic Party last year after frequently bucking the party and the White House. She has not said whether she will run for reelection in a three-way contest against a Democrat and Republican in one of the most closely watched 2024 Senate races.
Sinema was one of 50 Democrats who voted for the 2018 legislation rolling back provisions of the Dodd-Frank financial regulation measure, which President Barack Obama signed in 2010 in response to the financial crisis that spawned the Great Recession. Gallego voted against it.
The Associated Press contributed to this report
Citadel founder says US shouldn’t bail out depositors
Wednesday 15 March 2023 13:30 , Rachel Sharp
The founder of Citadel hedge fund has said that the US shouldn’t guarantee the deposits for customers at Silicon Valley Bank and Signature Bank after the two institutions failed.
Ken Griffin told the Financial Times that if the Biden administration refused to bail out customers it would be a “great lesson in moral hazard”.
“There’s been a loss of financial discipline with the government bailing out depositors in full,” he said.
“The US is supposed to be a capitalist economy, and that’s breaking down before our eyes.
“Losses to depositors would have been immaterial, and it would have driven home the point that risk management is essential.”
He added: “We’re at full employment, credit losses have been minimal, and bank balance sheets are at their strongest ever. We can address the issue of moral hazard from a position of strength.”
His comments came before it emerged that Citadel had bought a 5.3 percent stake in Western Alliance.
On Sunday, the Biden administration promised to protect depositors at the two failed banks, in a move that appears to have helped reduce market concerns.
Breaking: UK will avoid recession in 2023, chancellor says
Wednesday 15 March 2023 13:00 , Rachel Sharp
The UK will not enter a “technical recession” this year, the UK’s chancellor Jeremy Hunt told the Commons.
Starting his Budget, Mr Hunt said the British economy is “proving the doubters wrong” in the face of “enormous challenges.”
He added that the UK economy is “on the right track.”
The chancellor said: “We remain vigilant, and will not hesitate to take whatever steps are necessary for economic stability. Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.
“They forecast we will meet the prime minister’s priorities to halve inflation, reduce debt and get the economy growing. We are following the plan and the plan is working. But that’s not all we’ve done.”
Read the story here:
UK will avoid recession in 2023, chancellor says
Signature Bank was under criminal investigation when New York regulators seized it
Wednesday 15 March 2023 12:30 , Rachel Sharp
Signature Bank was the focus of a criminal investigation when New York regulators seized it over the weekend, it has been revealed.
Sources told Bloomberg that Justice Department investigators in Washington and Manhattan were investigating the bank over whether it had taken appropriate steps to detect possible money laundering operations.
The Securities and Exchange Commission (SEC) was also investigating the matter, the sources said.
New York regulators shuttered the bank – which predominantly serves crypto clients – on Sunday, making it the second US bank to shutter in just three days.
Democrats vow to give SVB donations back
Wednesday 15 March 2023 12:00 , Rachel Sharp
Several Democrats are vowing to hand back donations they received from Silicon Valley Bank’s former CEO Greg Becker and its political action committee (PAC) in the wake of the bank’s sudden collapse.
A source told CNBC Senate Majority Leader Chuck Schumer has vowed to give the funds to charity.
Mr Schumer received a $5,800 donation from Mr Becker to his campaign in June 2021 and a $2,700 donation from its PAC in 2016, records show.
Meanwhile, Rep Maxine Waters said she will hand back the $2,500 donation she was given by the bank’s PAC, reported Politico.
Bitcoin price resurgence revives ‘digital gold’ comparisons
Wednesday 15 March 2023 11:30 , Rachel Sharp
Bitcoin’s recent price revival has once again bolstered the cryptocurrency’s reputation as a form of “digital gold” among some analysts, who claim it serves as a safe-haven asset during times of geopolitical and economic crisis.
The world’s leading cryptocurrency is up more than 10 per cent over the last week, despite turmoil among the banking and tech sector.
Bitcoin’s price trajectory actually mirrored that of gold’s during the collapse of Silicon Valley Bank (SVB) earlier this week, having previously followed a similar path to stocks.
Read the full story:
Bitcoin price resurgence revives ‘digital gold’ comparisons
Credit Suisse stocks plunge to new record low
Wednesday 15 March 2023 11:10 , Rachel Sharp
Credit Suisse stocks plunged to a new record low, dropping by more than 21 percent on Wednesday morning as the fallout from the collapse of Silicon Valley Bank (SVB) continues.
Shares in the struggling Swiss bank plummeted for a second consecutive day after its top shareholder Saudi National Bank said it would not provide any further financial assistance.
“We cannot because we would go above 10 percent. It’s a regulatory issue,” Saudi National Bank Chairman Ammar Al Khudairy told Reuters on Wednesday.
Concerns are mounting that the Swiss bank could be the next to collapse after it revealed it had found “material weaknesses” in its financial report on Tuesday.
Wall Street expert Robert Kiyosaki, famed for predicting the Lehman Brothers’ failure, has pegged Credit Suisse as the next major bank most likely to collapse.
New Silicon Valley Bank CEO brings experience and ‘humility’
Wednesday 15 March 2023 10:00 , Oliver O'Connell
In a message to clients, newly appointed Silicon Valley Bank CEO Tim Mayopoulos says: “I look forward to getting to know the clients of Silicon Valley Bank. I come to this role with humility. I also come to this role with experience in these kinds of situations.”
He explains: “I was part of the new leadership team that joined Fannie Mae in the wake of the financial crisis in 2008-09, and I served as the CEO of Fannie Mae from 2012-18. I am very proud of work we did there to restore the company to profitability and to stabilize the housing finance system in a period of unprecedented challenge.”
Mr Mayopoulos adds: “I also come with experience in and an appreciation for the innovation economy. Until recently, I was the president of a Silicon Valley-based software company that provides technology to financial institutions to serve their consumer banking customers. I know how important Silicon Valley Bank has been and continues to be to the success of its clients and the innovation ecosystem.”
Tough decisions ahead as Fed criticised for missing red flags before bank failure
Wednesday 15 March 2023 09:30 , Oliver O'Connell
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 U.S. 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.
Read more:
Fed, under criticism for bank failure, faces tough decisions
Premium: Has enough been done to calm Wall Street over the banking crisis?
Wednesday 15 March 2023 09:00 , Oliver O'Connell
James Moore, The Independent’s chief business commentator, writes:
Just what we needed right now: another banking crisis. But after the bloodbath at the beginning of the week, a rally quickly got underway. Regional banks in the United States – in real danger of experiencing a run on their deposits while larger rivals benefit from inflows – found some support.
Has enough been done to calm Wall Street over the banking crisis?
Private equity firms interested in SVB loan book, reports say
Wednesday 15 March 2023 08:30 , Oliver O'Connell
CNBC reports that private equity firms Apollo Global Management and KKR are among the institutions reviewing a book of loans held by Silicon Valley Bank. The network cites people familiar with the discussions who requested anonymity.
Two of the sources said Apollo may be interested in acquiring a piece of the business but it is unclear if the FDIC would prefer a single buyer for the whole bank.
Bloomberg earlier reported a number of private equity firms were interested in the bank’s loan portfolio, including Ares Management, Blackstone, and Carlyle Group, in addition to Apollo and KKR.
New Silicon Valley Bank CEO: ‘We are open for business’
Wednesday 15 March 2023 08:00 , Oliver O'Connell
Tim Mayopoulos, the new CEO of Silicon Valley Bank — now technically known as Silicon Valley Bridge Bank — has declared the bank is open for business.
In a message posted to the company’s website and emailed to customers, Mr Mayopoulos said: “We are doing everything we can to rebuild, win back your confidence, and continue supporting the innovation economy. We recognise the past few days have been an extremely challenging time, and we are grateful for your patience.”
He continued: “We are open for business and are hard at work bringing all systems and solutions back online to support you. We are making new loans and fully honoring existing credit facilities.
“The number one thing you can do to support the future of this institution is to help us rebuild our deposit base, both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days.”
Underlining the announcement yesterday that depositors have full access to their money, and that both new and existing deposits are fully protected by the FDIC, he characterised the bank as now among the safest in the country thanks to the actions of regulators.
The bank is actively opening new accounts of all sizes and making new loans, Mr Mayopoulos added.
Lawmaker’s explanation of Silicon Valley Bank’s collapse goes viral
Wednesday 15 March 2023 07:30 , Oliver O'Connell
A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.
North Carolina Democrat Jeff Jackson, originally from Chapel Hill, was elected to the US House of Representatives for the state’s 14th District in 2022.
At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.
Read more:
North Carolina lawmaker’s video explanation of the SVB collapse earns praise online
Are we in the clear yet? Not according to some experts
Wednesday 15 March 2023 07:15 , Oliver O'Connell
A Wall Street expert has revealed which bank he believes will fail next, following the Silicon Valley Bank (SVB) collapse.
SVB folded on Friday after failing to raise new capital after it sold government bonds at heavy losses to reimburse customers withdrawing their cash.
Now Robert Kiyosaki, who accurately predicted the 2008 Lehman Brothers’ collapse, warned that Credit Suisse could be at risk as the volatile bond market crashes, with rising interest causing bonds to fall in price.
Kate Plummer has the story.
Wall Street expert predicts next major bank to fold
Class action suit filed against Silicon Valley Bank parent
Wednesday 15 March 2023 06:45 , Oliver O'Connell
A class action lawsuit is being filed against the parent company of Silicon Valley Bank, its CEO and its chief financial officer, saying that company didn’t disclose the risks that future interest rate increases would have on its business.
The lawsuit against SVB Financial Group, CEO Greg Becker and CFO Daniel Beck was filed in the US district court for the Northern district of California. It is looking for unspecified damages to be awarded to those who invested in SVB between June 16, 2021 and March 10, 2023.
The lawsuit from shareholders led by Chandra Vanipenta says some quarterly and annual financial reports from SVB didn’t fully account for warnings from the Federal Reserve about interest rate hikes.
Class action suit filed against Silicon Valley Bank parent
After blame laid on Trump administration, Pence deflects to Biden for Silicon Valley Bank collapse
Wednesday 15 March 2023 06:15 , Oliver O'Connell
Former Vice President Mike Pence has joined the choir of conservative voices trying to pin the Silicon Valley Bank collapse on Democrats while Democrats try to do the same to them.
In an editorial for The Daily Mail, Mr Pence takes aim at Joe Biden and the Democrats, claiming that “just like 2008,” the party has “increased spending by over $10 trillion” that “fueled record inflation, inevitably requiring the FED to raise interest rates.”
He laid some of the blame on the bank, which collapsed on Friday, and laced his criticisms with conservative media buzzwords.
Graig Graziosi reports on what the former vice president said.
Pence: Biden to blame for SVB collapse
‘Woke banks’ become Republican scapegoat for SVB collapse
Wednesday 15 March 2023 05:45 , Oliver O'Connell
For months, right-wing media figures and Republican elected officials have blamed a “woke” agenda for what they perceive is the collapse of American institutions, from its schools and workplaces to the banks that facilitate their businesses.
The historic failure of Silicon Valley Bank is likely the result of a host of compounded factors that have nothing to do with so-called “wokeness,” from Donald Trump-era cuts to regulations that were put in place during the last financial crisis to the bank’s untenable concentration in an explosion of venture capital firms and tech startups as it careened into reality, rising interest rates and panic.
Alex Woodward reports.
Republicans blame ‘wokeness’ for Silicon Valley Bank’s collapse
Demise of SVB disrupts the disruptors in tech
Wednesday 15 March 2023 04:45 , Oliver O'Connell
Silicon Valley Bank’s collapse rattled the technology industry that had been the bank’s backbone, leaving shell-shocked entrepreneurs thankful for the government reprieve that saved their money while they mourned the loss of a place that served as a chummy club of innovation.
Silicon Valley Bank's demise disrupts the disruptors in tech
BUT New York regulator says Signature Bank closure ‘nothing to do with crypto’
Wednesday 15 March 2023 03:15 , Oliver O'Connell
New York’s financial regulator has pushed back on former Rep Barney Frank’s comments, saying its decision to close Signature Bank had “nothing to do with crypto,” citing what it called “a significant crisis of confidence in the bank’s leadership” that occurred over the weekend after regulators shuttered Silicon Valley Bank.
Mr Frank is a board member of Signature Bank and was one of the pioneers of the landmark Dodd-Frank Act, which was enacted after the 2008 financial crisis to better insulate the banking system from shocks.
“I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” Mr Frank told CNBC on Monday. “We became the poster boy because there was no insolvency based on the fundamentals.”
But NYDFS denied his claims in a statement on Tuesday, saying that its decision to close Signature Bank on Sunday and appoint the Federal Deposit Insurance Corp as receiver “was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”
“The decisions made over the weekend had nothing to do with crypto. Signature was a traditional commercial bank with a wide range of activities and customers,” an NYDFS spokesperson said.
“DFS has been facilitating well-regulated crypto activities for several years, and is a national model for regulating the space,” they said.
The spokesperson added that as withdrawal requests ballooned over the weekend, Signature Bank failed to provide reliable and consistent data.
Mr Frank said he was surprised the regulator said the decision to close the bank was not related to cryptocurrency.
“I think that was a factor,” he said in an interview. “I’m puzzled as to why it was closed.”
He added that to his knowledge, bank executives were working to provide data to regulators.
“What we heard from our executives is that the deposit situation had stabilised and they would be getting the capital from the discount window and I continue to be convinced that if we had opened on Monday given the announcements of those two policies, we would have been in a reasonably good shape and certainly functional,” he said.
Signature was a commercial bank with private client offices with nine national business lines including commercial real estate and digital asset banking.
With reporting from Reuters
Barney Frank claims Signature Bank seized to send banks a message
Wednesday 15 March 2023 02:45 , Oliver O'Connell
A regulatory takeover of a New York-based bank was intended to send a message to U.S. banks to stay away from the cryptocurrency business, a former member of Congress who was on the bank’s board says.
Former US Rep. Barney Frank said Monday that he believes the state officials behind the action were trying to make an example of Signature Bank.
“This was just a way to tell people, ‘We don’t want you dealing with crypto,’” Frank told The Associated Press in a telephone interview.
Signature Bank seized to send banks a message, director says
Voices: Ghosts of the 2008 financial crisis loom over Biden’s response
Wednesday 15 March 2023 01:15 , Oliver O'Connell
Eric Garcia writes:
When President Joe Biden announced on Monday that people who had deposited their money in the now-unraveled Silicon Valley Bank would have their money available, he emphasised that American taxpayers would not be left on the hook.
Similarly, he added that the people responsible at the bank would need to be fired and that investors in Silicon Valley Bank would not be made whole, arguing that they took a risk and now have to suffer the losses.
Ghosts of the 2008 financial crisis loom over Biden’s response to Silicon Valley Bank
DOJ and SEC to probe stock sales ahead of Silicon Valley Bank collapse, report says
Wednesday 15 March 2023 00:15 , Oliver O'Connell
The US Department of Justice and the Securities and Exchange Commission are investigating the collapse of Silicon Valley Bank, The Wall Street Journal reports, citing people familiar with the matter.
The tech and start-up-focused lender based in Santa Clara, California, was taken over by regulators on Friday during a run on its deposits, making it the second-largest bank failure in US history.
It is not unusual for there to be such investigations when large financial institutions or public companies collapse or suffer unexpected losses, but the separate probes will also look at stock sales that company bosses made days before the bank failed.
SVB: Justice Department and SEC to probe stock sales ahead of collapse
Lawmaker’s explanation of Silicon Valley Bank’s collapse goes viral
Tuesday 14 March 2023 23:45 , Oliver O'Connell
A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.
North Carolina Democrat Jeff Jackson, originally from Chapel Hill, was elected to the US House of Representatives for the state’s 14th District in 2022.
At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.
Read more:
North Carolina lawmaker’s video explanation of the SVB collapse earns praise online
Voices: The Silicon Valley Bank collapse has made three things horrifically clear
Tuesday 14 March 2023 23:15 , Oliver O'Connell
It was no Lehman Brothers moment, but there are three hard lessons to be learned from the past few days, writes David Callaway.
The Silicon Valley Bank collapse has made three things horrifically clear
Biden says banking system is ‘safe’ and vows accountability for executives
Tuesday 14 March 2023 22:45 , Oliver O'Connell
President Joe Biden reassured Americans that the nation’s banking system is safe after Silicon Valley Bank collapsed last week and said there would be accountability for financial executives.
The president’s actions come after the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation announced on Sunday evening that depositors for Silicon Valley Bank would have access to their money.
Eric Garcia filed this report from Washington, DC, on Monday.
Biden says banking system is ‘safe’ after Silicon Valley Bank collapse
Tuesday 14 March 2023 22:15 , Oliver O'Connell
Jeremy Hunt hails ‘great resilience’ as HSBC rescues Silicon Valley Bank UK branch
Recap: Why did Silicon Valley Bank collapse?
Tuesday 14 March 2023 21:45 , Oliver O'Connell
The collapse of the 16th largest bank in the US sent ripples through global markets on Monday as governments and businesses scrambled to figure out what the impact would be and how it could be contained.
Silicon Valley Bank collapsed on Friday after failing to raise new capital last week.
On Monday, the UK government said that HSBC would take over the UK wing of the bank.
But what was SVB, why did it collapse, and are other banks at risk? We examine these questions here.
Why did Silicon Valley Bank collapse and are other lenders at risk?
Top GOP Senate Finance member: No new banking rules needed
Tuesday 14 March 2023 21:25 , Oliver O'Connell
Senator Mike Crapo, the top Republican on the Senate Finance Committee told CNN’s Manu Raju that no new banking rules were needed following the collapse of Silicon Valley Bank, arguing the system is in place, but better supervision is needed.
Mr Crapo was the author of the 2018 bill that led to the rollback of the Dodd-Frank regulations put in place after the 2008 global financial crisis.
“The regulatory system is in place. The regulatory authorities that Congress has given to the Fed and the FDIC are completely adequate for the system to work,” he said.
“We simply need to have better supervision, and probably, like I said, a little tuning up of how the regulatory stress testing works with regard to liquidity issues in the banks right now.”
Crapo added: “We simply need to have better supervision, and probably, like I said, a little tuning up of how the regulatory stress testing works with regard to liquidity issues in the banks right now.”
— Manu Raju (@mkraju) March 14, 2023
Watering down financial regulations sees Trump blamed for Silicon Valley Bank collapse
Tuesday 14 March 2023 21:15 , Oliver O'Connell
Critics looking to assign blame for the collapse of Silicon Valley Bank have found possible culprits in Donald Trump and Republican senators.
Though little known outside of Silicon Valley, the SVB was the leading lender to tech firms and startups before it crumbled on Friday.
Graig Graziosi reports.
Trump blamed over Silicon Valley Bank collapse for cutting down financial regulations
