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Business News/ News / World/  SVB updates: Swiss govt 'pressured' by another nation to intervene on Credit Suisse, says Report
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SVB updates: Swiss govt 'pressured' by another nation to intervene on Credit Suisse, says Report

Silicon Valley Bank Highlights: Credit risk indicators flashed red on Monday, as investors worried about contagion risks across corporate debt markets after the collapse of Silicon Valley Bank (SVB) and New York's Signature Bank in the space of 72 hours

Silicon Valley Bank crisis: US authorities swooped in and seized the assets of SVB, a key lender to US startups since the 1980s (AFP)Premium
Silicon Valley Bank crisis: US authorities swooped in and seized the assets of SVB, a key lender to US startups since the 1980s (AFP)

The collapse of the Silicon Valley Bank has rocked the markets, raising concerns that other banks could be facing similar problems. On Friday last week, the regulators took control of SVB – a key lender to startups across the US since the 1980s – after a huge run on deposits left the medium-sized bank unable to stay afloat on its own.

On Sunday, US authorities unveiled sweeping measures to rescue depositors' money at the failed SVB.

Meanwhile, the bank's UK arm will is being acquired by HSBC Holdings Plc, the culmination of a frantic weekend where ministers and bankers explored various ways to avert the SVB unit’s collapse.

15 Mar 2023, 11:52:59 PM IST

Bank fears spread to Europe, drag down shares of big lenders

Fears about the world banking system spread to Europe on Wednesday as shares in the globally connected Swiss bank Credit Suisse plunged and dragged down other major European lenders in the wake of bank failures in the United States.

At one point, Credit Suisse shares lost more than a quarter of their value, hitting a record low after the bank's biggest shareholder — the Saudi National Bank — told news outlets that it would not put more money into the Swiss lender, which was beset by problems long before the U.S. banks collapsed.

The turmoil prompted an automatic pause in trading of Credit Suisse shares on the Swiss market and sent shares of other European banks tumbling, some by double digits. That fanned new fears about the health of financial institutions following the recent collapse of Silicon Valley Bank and Signature Bank in the U.S.

Speaking Wednesday at a financial conference in the Saudi capital of Riyadh, Credit Suisse Chairman Axel Lehmann defended the bank, saying, “We already took the medicine" to reduce risks.

When asked if he would rule out government assistance in the future, he said: “That’s not a topic. ... We are regulated. We have strong capital ratios, very strong balance sheet. We are all hands on deck, so that’s not a topic whatsoever."

A day earlier, Credit Suisse reported that managers had identified “material weaknesses" in the bank’s internal controls on financial reporting as of the end of last year. That fanned new doubts about the bank’s ability to weather the storm.

Credit Suisse stock dropped about 30%, to about 1.6 Swiss francs ($1.73), before clawing back to a 24% loss at 1.70 francs ($1.83) in late afternoon trading on the SIX stock exchange. At its lowest, the price was down more than 85% from February 2021.

The stock has suffered a long, sustained decline: In 2007, the bank's shares traded at more than 80 francs ($86.71) each.

With concerns about the possibility of more hidden trouble in the banking system, investors were quick to sell bank stocks. (AP)

15 Mar 2023, 11:36:33 PM IST

US Treasury reviewing US banks’ exposure to Credit Suisse

The Treasury Department is actively reviewing the US financial sector’s exposure to Credit Suisse Group AG after the bank’s stock saw its biggest one-day drop on record, according to people familiar with the matter.

Officials at the Treasury Department are working closely with the Federal Reserve and European regulators, said one of the people, who spoke on condition of anonymity. Spokespersons for the Treasury Department and the Fed declined to comment. (Bloomberg)

15 Mar 2023, 11:06:16 PM IST

Credit Suisse posted loss of $1.5 billion in Q4: Report

15 Mar 2023, 11:02:13 PM IST

Swiss govt 'pressured' by another nation to intervene on Credit Suisse: Report

15 Mar 2023, 09:55:38 PM IST

UK stocks give up 2023 gains amidst carnage in banking shares

UK stocks wiped out year-to-date gains on the back of sharp downfall in banking and commodities shares. Even Chancellor Jeremy Hunt’s budget did little to calm the panic in market which has been riled up after two US banks failure over liquidity risks. 

According to Bloomberg report, the FTSE 350 index dropped as much as 3.2% on Wednesday, the most since June as lenders including HSBC Holdings Plc and Barclays Plc plunged with global peers in the wake of turmoil at Credit Suisse Group AG and continued fallout from Silicon Valley Bank’s collapse. Oil and industrial metals slumped, dragging down Shell Plc, BP Plc, Glencore Plc and Rio Tinto Plc.

Hunt’s budget measures which involves energy support for households and added defense spending --- were already priced into the market after being reported earlier by the media.

15 Mar 2023, 09:14:50 PM IST

Major US banks' stocks plummet

Major US banks' stock sank on Wednesday tracking a sharp selloff in European banks after Credit Suisse Group AG plunged to record low over contagion fear.

Stocks such as Citigroup Inc. and Goldman Sachs Group Inc -- dropped by more than 4%. The KBW Bank Index plunged by as much as 5.1%, amid a downfall in Bank of America Corp., JPMorgan Chase & Co., Morgan Stanley, and Wells Fargo & Co.

Credit Suisse stock free fall led to over $60 billion market rout in European banks.

15 Mar 2023, 08:36:46 PM IST

S&P downgrades rating on First Republic Bank

In a statement, on Wednesday, S&P Global Ratings lowered its long-term issuer credit rating on First Republic Bank to 'BB+' from 'A-'. The rating agency also lowered the senior unsecured issue rating to 'BB+' and the subordinated and preferred stock issue ratings to 'BB-', and 'B', respectively.

Further, S&P placed all of its ratings on First Republic on CreditWatch with negative implications.

S&P believes the risk of deposit outflows is elevated at First Republic--despite actions by federal regulators. In the wake of recent bank failures due to liquidity issues and the ensuing market stress, the Federal Reserve Board announced on March 12, 2023, certain emergency liquidity measures, including the creation of the Bank Term Funding Program (BTFP) and an easing of terms offered through the discount window.

15 Mar 2023, 06:31:42 PM IST

Why Credit Suisse stock is nosediving?

Swiss bank Credit Suisse has dropped by 24% and touched a record low on Wednesday. The downfall comes after one of the biggest backers Saudi National Bank ruled out the possibility to aid more funds in the lender. Also, Credit Suisse has come under the regulatory radar. While the clients' outflow in their ambit has raised the question of whether Credit Suisse needs government assistance.

As per reports, Credit Suisse stock plunged over fears of contagion from the collapse of two US banks. Also, its annual report for 2022 cited "material weaknesses" in internal controls.

The discomfort around Credit Suisse has even fuelled around $60 billion of rout in European banks.

15 Mar 2023, 04:28:41 PM IST

European market tumbles on concerns over banking sector

European stocks gave up the previous session's gains and were back in the red zone on Wednesday as investors turned cautious on banking sector concerns. Apart from the Silicon Valley Bank collapse saga, Credit Suisse shares are tanking after its top shareholder ruled out fresh assistance.

Main indices in Paris and Milan plummeted by more than 3%, while Frankfurt and London dipped by at least 2.5%.

Credit Suisse's share price has nosedived by nearly 24%, while France-based Societe Generale has dived by around 10% roughly.

15 Mar 2023, 03:09:48 PM IST

HSBC CEO asks SVB UK staff to assure their clients 

In an email to SVB UK colleagues, HSBC's CEO said, "we talked about the great potential of this organisation and the UK’s technology and life sciences sector. We’re excited to be working with such a strong team to support their customers."

He has urged SVB UK staff to assure their clients that deposits are safe and loans are protected backed by the strenght and security of HSBC.

15 Mar 2023, 02:30:00 PM IST

“In tech and VC, SVB has always been the bank of choice”

Balaji Kridha, Head of Startup launchpad, Deshpande Startup:

It surprised me that people are blaming startups for depositing money with a bank like SVB. In the tech industry and venture capital, SVB has always been the bank of choice, especially with US entities and part of Y-Combinator. To blame startups here was completely wrongheaded.

The current situation highlights the importance of Fed & FDIC providing protections to depositors and raises questions about the health of the banking industry, particularly when it comes to potential systemic risks. It serves as a reminder for startups to diversify where their funds are deposited, with even smaller banks needing to be included in that strategy. Investors should also remain vigilant, as there could still be instability in future. This would help mitigate any ripple effects both on a global and local level.

15 Mar 2023, 01:52:15 PM IST

SVB crisis unlikely to spread to Japan, says Regional Banker

The massive fallout of Silicon Valley Bank and its repercussions are “extremely unlikely" to spread to Japan, opines Japan's top regional banker.

Renewed worries about a US recession erupted after US bankers collapse, and fading expectations for early rate hikes by the Bank of Japan contributed to a selloff in the stocks of local lenders in recent days, said Tsutomu Yonemoto, chairman of the Regional Banks Association on Wednesday.

The sudden plunge came after bets on a shift in central bank policy - which would lift lending margins - boosted Japan’s financial stocks in recent months.

 

15 Mar 2023, 01:28:30 PM IST

Banking system remains resilient, solid: US Fed governor Michelle Bowman amid SVB crisis

Amid heightened fears of banking crisis in the United States post SVB collapse, Federal Reserve Governor Michelle Bowman has reaffirmed that "the US banking system remains resilient and on a solid foundation."

He also said the US banking system remains resilient and continues to be on a solid foundation with strong capital and liquidity throughout the system.

"The US banking system remains resilient and on a solid foundation, with strong capital and liquidity throughout the system. The Board continues to carefully monitor developments in financial markets and across the financial system," Bowman said while addressing the Independent Community Bankers of America ICBA Live 2023 Conference on Tuesday (local time).

The Silicon Valley Bank collapsed last week, followed by the fallout of Signature Bank, creating chaos in the market.

15 Mar 2023, 12:59:23 PM IST

ECB likely to stick to big rate hike despite banking turmoil

European Central Bank policymakers are still leaning towards a half-percentage-point rate hike on Thursday, despite turmoil in the banking sector, as they expect inflation will remain too high in coming years, a source told Reuters.

Investors had begun to doubt the ECB's commitment to another big rate hike this week after the collapse of Silicon Valley Bank (SVB) in the United States sent ripples through global financial markets.

But the source close to the Governing Council said the ECB was unlikely to ditch its plan to raise rates by 50 basis points on March 16 - announced at its last meeting and repeated several times by President Christine Lagarde and her colleagues - because that would damage its credibility.

The source added that formal proposals for the meeting have not yet been distributed but policymakers have seen the new quarterly projections.

The new inflation forecasts for the next two years will be lower than in December but still put price growth well above the central bank's 2% target in 2024 and slightly above it in 2025.

(Reuters)

15 Mar 2023, 12:37:27 PM IST

Silicon Valley Bank collapse set to increase SoftBank Group's scrutiny 

The spectacular collapse of Silicon Valley Bank might increase trouble for other US lenders, and even bring SoftBank Group Corp. investments under heightened scrutiny. The shaken confidence of the investors might even bring down SoftBank Group Corp's share below Masayoshi Son’s pain point, reported Bloomberg.

The US tech lender's failure has raised concerns among investors over the exposure to start-up firms in the SoftBank Vision Funds. SoftBank shares have plunged 13% in four sessions to below 5,000 yen and are nearing a level that some see as Son’s threshold for announcing a buyback. The SVB crisis has brought the spotlight in private tech investments.

15 Mar 2023, 12:02:29 PM IST

Nazara Tech given unrestricted access to ₹64 crore held at SVB

Kiddopia & Mediawrkz, the two step-down subsidiaries of India's gaming and sports media platform, Nazara Tech, had unrestricted access to 64 crore held at Silicon Valley Bank, the company said in exchange filing. The 60 crore of the total amount held in the bank has been transferred to bank accounts outside of SVB. Whereas, the remaining 4 crore was still deposited in SVB accounts for unrestricted operational use.

15 Mar 2023, 11:42:01 AM IST

State Street Corp CEO calls Moody’s US banking outlook cut a ‘terrible overreaction’

Moody's Investors Service's outlook cut for the US banking system was a “a terrible overreaction", said the head of one of the world's largest asset managers, State Street Corporation, Ron O’Hanley, in his interview with Bloomberg TV. He also added that regulators had reassured the market following the breakdown of three US banks.

“There were a lot of unique circumstances around the banks in question — both on the asset and liabilities side," State Street Corp. Chief Executive Officer Ron O’Hanley told Bloomberg TV on Wednesday. “I don’t think it’s helpful when rating agencies treat entire sectors the same way."

Notably, Moody's cut its outlook for the US banking system to negative from stable, citing the run on deposits at Silvergate Capital Corp., SVB Financial Group’s Silicon Valley Bank and Signature Bank that led to their collapse. 

15 Mar 2023, 11:11:30 AM IST

Indian banking is most robust, says MoS Rajeev Chandrashekhar on SVB crisis

Union Minister of State for Skill Development & Entrepreneurship and Electronics and IT , Rajeev Chandrasekhar interacted with over 450 startups, owned/co-owned by Indians, Venture Capitalists (VCs), Industry leaders and others stakeholders on the collapse of Silicon Valley Bank through video conferencing from New Delhi on Tueday. The minister assured them that the Narendra Modi government is laser-focused on helping them tide over this crisis. Read full report here

15 Mar 2023, 10:32:32 AM IST

Invesco, Franklin among firms that invested in SVB before collapse

Asset managers including Invesco Ltd and Franklin Resources Inc. added shares of SVB Financial Group in the months before the SVB collapse wiped 60% off its stock value in single day. 

The two firms were among the two 10 buyers of the share since September. Other major investors in the collapsed bank were Two Sigma Investments, DE Shaw & Co., Renaissance Technologies LLC and BlackRock Inc., according to data compiled by Bloomberg from fourth quarter and more recent regulatory filings and other fund documents.

15 Mar 2023, 10:03:46 AM IST

Treasuries liquidity dwindles as SVB crisis muddies Fed outlook

Liquidity in the world’s largest bond market is evaporating as the US banking crisis muddies the outlook for the Federal Reserve’s monetary policy.

Bid-ask spreads on two-, 10- and 30-year US government bonds jumped to the highest level in at least in six months on Tuesday, according to data compiled by Bloomberg. The 10-year yield swung in a 34-basis point range on Monday, the biggest gap since the onset of the pandemic in 2020.

“Between late cycle dynamics, an aggressive Fed, strong data and contagion risks, these risks are proving hard to stomach," said Eugene Leow, a senior rates strategist at DBS Bank Ltd. in Singapore. The wider bid-ask spreads reflect elevated volatility that’s rendering market participants cautious, he said.

The deterioration in liquidity signals uncertainty about the Fed’s rate-hike path after the collapse of three US lenders underscored the damage wrought by higher borrowing costs. The volatility risks spreading into other assets that use Treasuries as a benchmark, with traders fearful that a wider US banking crisis may be brewing.

(Bloomberg)

15 Mar 2023, 09:52:14 AM IST

No contagion seen on Indian bonds, FX from SVB collapse, says DBS Bank's Vaidya

Indian fixed-income and foreign-exchange markets are unlikely to see any major fallout after the collapse of a U.S. lender dented risk sentiment, a senior treasury executive at DBS Bank said on Tuesday.

"We generally have an FX fallout if there is a change based on any country-specific nuances," said Ashhish Vaidya, managing director and head - treasury & markets at DBS Bank India.

"The dollar index is not stretching as the typical risk-off scenario. Unless commercial activity drops across the world, which does not seem to be the case, we may not see any major impact."

The U.S. banking regulators said depositors at Silicon Valley Bank (SVB), which shuttered on Friday, would have access to their funds, easing fears that startups would struggle to pay their employees this week.

(Reuters)

15 Mar 2023, 09:35:16 AM IST

Banking crisis was looming in plain sight, says ARK Investment Management chief Cathie Wood

Calling out upon the regulators, ARK Investment Management chief Cathie Wood, said US Regulators should have focused more on the signs of looming failure in the traditional banking system instead of blocking decentralized financial platforms.

“Instead of blocking decentralized, transparent, auditable and well-functioning financial platforms with no central points of failure, regulators should have been focused on the centralized and opaque points of failure looming in the traditional banking system," tweeted Cathie Wood.

15 Mar 2023, 09:16:12 AM IST

Goldman Sachs was the buyer of portfolio SVB booked losses on, says SVB Financial Group

Goldman Sachs Group Inc was the acquirer of a bond portfolio that earned losses of $1.8 billion, a transaction that set in motion the failure of SVB, reported Reuters. 

Notably, the loss on the portfolio was the main reason behind the technology focused lender's attempt of $2.25 billion stock sale last week using Goldman Sachs as an adviser. The capital raise was thwarted as depositors fled and investors fretted SVB would have needed even more capital.

The portfolio SVB sold to Goldman Sachs on March 8 consisted mostly of U.S. Treasuries and had a book value of $23.97 billion, SVB said. The transaction was carried out "at negotiated prices" and netted the bank $21.45 billion in proceeds, SVB added.

15 Mar 2023, 08:45:55 AM IST

Easier bank rules have ‘nothing to do’ with SVB failure, says ex-Fed Vice Chair Randal Quarles

Former Federal Reserve Vice Chair for Supervision Randal Quarles rejected the role of looser rules in Silicon Valley Bank's collapse and said he expects the Fed to raise rates a quarter point next week.

He added that the financial stability concerns surrounding SVB's failures undermine support for a 50 basis-point increase at the Fed’s March 21-22 meeting. He said a smaller move, followed by a policy pause, was the most likely outcome.

Rejecting the claims of the role of Fed's loose rules behind the collapse, he said the changes made to bank regulation during his tenure“had nothing to do" with the SVB collapse. 

15 Mar 2023, 08:18:24 AM IST

Oil prices overcome US banks failure-led bearish market sentiments

After hitting 5-week low yesterday, oil prices rose in early Asia trade on Wednesday. The surge in oil price was driven by stronger OPEC outlook on China's demand that helped offset bearish global investor sentiment in the wake of the recent U.S. bank failures.

Brent crude futures climbed 62 cents, or 0.8%, to $78.07 a barrel by 0058 GMT, reported Reuters. US West Texas Intermediate crude futures (WTI) gained 70 cents, or 1.0%, to $72.03 a barrel. On Tuesday, the benchmarks fell more than 4% to a three-month low.

"The oil market has bounced back on its own after the recent sharp losses," Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd, told Reuters. He also added that the fall in the oil prices stood as an advantage for investors looking to hunt for bargains.

15 Mar 2023, 08:04:41 AM IST

Asia stocks climb, as investors hope of surpassing US bank woes

After a significant decline in share value across the global market, Asian equities improved on Wednesday amid expectations of the markets exceeding the worst impact of the global fallout from the American banking sector. The Hong Kong and Tokyo markets were led by the financial stocks. South Korea's Kospi jumped by 2%  and Australian shares showed nominal gains. Read latest report on global stock markets here.

15 Mar 2023, 07:55:22 AM IST

Charles Schwab CEO says firm has liquidity, not seeking capital or deals

Charles Schwab has ample liquidity, the chief executive of the bank and brokerage said on Tuesday, moving to allay concerns about a "doomsday scenario" that has weighed broadly on bank stocks after the failure of two U.S. lenders since Friday.

"We have not raised capital and we are not in the market at this point for M&A transactions," Walt Bettinger, CEO of Charles Schwab, told Reuters in an interview.

The firm had seen an influx of $4 billion in assets to its parent company on Friday as clients moved assets to Schwab from other firms, Bettinger said.

Schwab on Monday reported that total client assets had slid to $7.38 trillion in February, down 4% compared with a year ago.

Bettinger said Schwab was comfortable with the assets on its bank portfolio, which is separate from its brokerage business. He contrasted it with the portfolios of other companies that had run into trouble.'

(Reuters)

15 Mar 2023, 07:36:58 AM IST

Bank of America emerges as big winner after SVB collapse, gets more than $15 billion in deposits 

The collapse of Silicon Valley Bank has emerged as an opportunity for other well established banks of America. Post the SVB demise, Bank of America Corp. mopped up more than $15 billion in new deposits in a matter of days, reported Bloomberg. The bank has emerged as the winner from the situation, for sure. To deal with the market fear of an expanding banking crisis, depositors are seeking refuge in the firms that are still considered as too big to fail. The money flowing into the second-largest US bank was described by people with direct knowledge of the matter, who asked not to be identified as the information isn’t public.

15 Mar 2023, 07:26:59 AM IST

Signature Bank attracted criminal probe even before its collapse

Way before its collapse, Signature Bank came under the scanner of US prosecutors, who were investigating Signature Bank's association with crypto clients, reported Bloomberg News citing people familiar with the matter.  

U.S. Justice Department investigators in Washington and Manhattan were examining whether the now-collapsed bank took mandatory step to identify potential money laundering by its clients. The report also said the Securities and Exchange Commission (SEC) was also scruitinising the bank.

15 Mar 2023, 07:14:07 AM IST

Fed to consider tougher rules for midsize banks after SVB collapse, says report

After the collapse of Silicon Valley Bank and its induced chain reaction across the banking sector, Federal Reserve is planning to come up with tougher rules and oversight for midsize banks similar in size to SVB, reported Reuters citing its sources.

Notably, the bank's collapse has sparked fears across the financial system of a fresh bank crisis. It also drove government to take firm measures to reassure depositors and backstop the system, and set off debate about reversing previous rule easing for regional banks.

Now, a review of the $209 billion bank's failure being conducted by Fed Vice Chair for Supervision Michael Barr could lead to strengthened rules on banks in the $100 billion to $250 billion range, the source told Reuters. Read latest report on SVB bank crisis here 

14 Mar 2023, 10:49:41 PM IST

Citadel buys big Western Alliance stake, others see bargain in regional banks

Hedge fund Citadel said on Tuesday it bought a 5.3% stake in Western Alliance Bancorporation , sending a strong signal of confidence as the company was swept up in growing fears of a broader financial crisis after two other banks were seized.

Western Alliance's share price, which had tumbled on Monday, jumped as much as 46% at midday after an initial halt in trading.

Citadel, run by billionaire Ken Griffin, earned $16 billion in profits for investors last year and its trades are closely watched by markets for trends. Last year's returns made Citadel the most successful hedge fund ever.

Western Alliance was one of several banks caught in a crippling sell-off which began last week after regulators shut down startup-focused bank SVB Financial Group, triggering worries of a contagion that rippled across financial markets. Signature Bank was also shut down by regulators.

14 Mar 2023, 10:32:26 PM IST

S&P gains nearly 2% as banks rebound; treasuries fall

US stock soared as traders wager the worst of the banking sector turmoil has passed, while Treasury yields climbed after the latest inflation reading cemented bets for a Federal Reserve rate hike next week.

The S&P 500 advanced 2.0%, the biggest one-day advance since early January, as regional bank shares bounced back from two days of frantic selling. The policy-sensitive Nasdaq 100 also rose more than 2%.

The two-year Treasury yield climbed — following a three-day swoon that was the biggest in decades amid the tumult — after data showed inflation remained elevated in February. Swaps traders now expect the Fed to lift rates by a quarter percentage point. Odds of an increase had slipped to nearly 50-50 on Monday. The dollar was little changed versus major peers.

US consumer prices rose 0.4% in February, meeting economists’ forecast. The closely watched core CPI number — which excludes food and energy — increased 0.5%, just ahead of the median estimate of 0.4%.

14 Mar 2023, 10:14:44 PM IST

Embattled Credit Suisse admits 'material weaknesses'

Credit Suisse acknowledged Tuesday "material weaknesses" in its internal controls as the scandal-hit Swiss bank released its annual report, which was delayed following queries from US regulators regarding its books.

Credit Suisse was supposed to publish its annual report last week but it postponed the release after a last-minute call from the US Securities and Exchange Commission over revisions made to cash-flow statements for 2019 and 2020.

The bank's report said that its "internal control over financial reporting was not effective" for 2021 and 2022.

"The material weaknesses that have been identified relate to the failure to design and maintain an effective risk assessment process to identify and analyse the risk of material misstatements in its financial statements," the report said.

14 Mar 2023, 10:02:35 PM IST

Signature Bank was seized after leaders caused ‘crisis of confidence’

Signature Bank was seized by the government Sunday after regulators lost faith in management, according to New York officials.

“The bank failed to provide reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership," a spokesperson for the state’s Department of Financial Services said in an emailed statement Tuesday. “The decision to take possession of the bank and hand it over to the FDIC was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday."

After the DFS put Signature into receivership, the Federal Deposit Insurance Corp. took over the institution and set up a bridge bank to serve clients. The collapse followed a surge in customer withdrawals on Friday that totaled about 20% of the company’s deposits, according to a person familiar with the matter.

14 Mar 2023, 09:50:02 PM IST

SVB exposes ‘lazy’ ESG funds as hundreds bet on doomed bank

Another market meltdown, and another costly lesson for ESG.

After being caught on the wrong side of Vladimir Putin’s war in Ukraine and the Adani scandal, hundreds of ESG fund managers are now dealing with the sting of having misjudged Silicon Valley Bank.

About 915 funds registered under European Union regulations as either “promoting" ESG or declaring it as their “objective" are exposed — directly or indirectly — to the now-collapsed bank, according to data compiled by Bloomberg.

For ESG investors, SVB appeared to tick several boxes. The bank was a big lender to renewable energy companies, a favorite among ESG managers on the lookout for low carbon footprints. But when it came to governance risks, fund managers seem to have been less attentive.

14 Mar 2023, 09:26:23 PM IST

Oil prices ease to 5-week low on fallout from US bank shutdowns

Oil prices fell about 1% to a five-week low on Tuesday as the collapse of Silicon Valley Bank, a U.S. bank, sparked fears of a fresh financial crisis that could reduce future oil demand.

Brent futures were down 51 cents, or 0.6%, to $80.26 a barrel by 11:36 a.m. EDT (1536 GMT), while U.S. West Texas Intermediate (WTI) crude fell 56 cents, or 0.8%, to $74.24.

That puts Brent on track for its lowest close since Feb. 3 and WTI on track for its lowest close since Feb. 22.

Shockwaves from Silicon Valley Bank's collapse triggered big moves in bank shares on Tuesday as investors fretted over the financial health of some lenders, in spite of assurances from U.S. President Joe Biden and other global policymakers.

14 Mar 2023, 09:10:34 PM IST

Record FDIC cash draw for SVB may affect debt ceiling 'X date'

The Federal Deposit Insurance Corp made a record withdrawal of $40 billion on Friday as it scrambled for resources to take over failing Silicon Valley Bank that same day, government data shows, a development that could have implications for how soon the Treasury runs out of operating room under the debt ceiling.

The FDIC withdrawal from the Treasury General Account was many times larger than any previous largest draws, according to data from the Daily Treasury Statement for March 10 released late on Monday.

Combined with about $13 billion of other federal agency withdrawals on Friday, that left Treasury with just over $208 billion in operating funds at the TGA, which is held at the Federal Reserve. That was down by more than $100 billion from Wednesday's TGA balance, reported by the Fed on Thursday.

14 Mar 2023, 08:49:29 PM IST

Signature Bank hit with investor suit over failure

Signature Bank was sued in a proposed class action by an investor who claims the bank’s managers made misleading statements that led to losses when it was placed into receivership on Sunday.

Matthew Schaeffer said he bought call options and was “economically damaged" by the bank’s failure, according to a complaint filed in federal court in Brooklyn, New York, on Tuesday.

The suit claims that the bank violated federal securities law and seeks unspecified damages. (Bloomberg)

14 Mar 2023, 08:41:04 PM IST

Moody's changes outlook on U.S. banking system to 'negative'

Moody's Investors Service on Tuesday revised its outlook on the U.S. banking system to "negative" from "stable", citing heightened risks for the sector after the rapid unraveling of SVB Financial Group fueled fears of contagion.

Bank runs at Silicon Valley Bank, Silvergate Capital Corp and Signature Bank have deteriorated the operating environment for the sector that is now battling a crisis of confidence, both from investors and depositors, the ratings agency said.

Lenders that had "substantial" unrealized securities losses and uninsured deposits may be hurt more as customers look for safer alternatives to park their funds.

Moody's also said it was expecting the Federal Reserve to continue tightening monetary policy, in contrast to some others who are expecting the bank collapses this month to reshape the trajectory for interest rate hikes. (Reuters)

14 Mar 2023, 08:23:51 PM IST

Class action suit filed against Silicon Valley Bank parent

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 U.S. 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.

In particular, the lawsuit said that annual reports for 2020 through 2022, “understated the risks posed to the company by not disclosing that likely interest rate hikes, as outlined by the Fed, had the potential to cause irrevocable damage to the company," the lawsuit stated. (AP)

14 Mar 2023, 07:57:53 PM IST

Stocks rebound as cooling inflation offsets bank fears

US and European stock markets rebounded on Tuesday as easing inflation data in the United States offset fears over the health of the banking system.

Shares of banks recovered after markets were rocked earlier this week by the collapse of two US regional lenders, which forced authorities to launch measures aimed at preventing contagion across the sector.

The markets bounced as the turmoil changed the views of investors about the likelihood of another interest rate hike next week by the US Federal Reserve as the central bank battles inflation.

Prior to the implosions of Silicon Valley Bank and Signature Bank, markets were concerned that the Fed could tip the economy into recession by stepping up its monetary tightening campaign.

14 Mar 2023, 07:43:57 PM IST

First Republic, PacWest Lead US Bank Bounce After SVB Rout

Regional US bank stocks rallied on Tuesday, clawing back some losses from the selloff seen in the wake of Silicon Valley Bank’s collapse, as concerns about wider contagion in the financial system eased.

First Republic Bank jumped as much as 63% for its sharpest intraday gain ever, following a record Monday drop, while PacWest Bancorp surged 64% and Western Alliance Bancorp rose 53%. Bigger lenders such as Bank of America Corp. and Citigroup Inc. also advanced. Meanwhile, Charles Schwab Corp. rallied as much as 18%.

While Tuesday morning’s bounce is helping stocks pare the recent carnage, they’re still far below levels from last week. First Republic would need a 268% rally from Monday’s close to reach its closing level from Wednesday, and PacWest would need to jump 174%.

14 Mar 2023, 07:30:03 PM IST

House Financial Services chair urges confidence, says financial agencies acting within law

The House Financial Services Committee chairman on Tuesday urged confidence in the nation's banking system, saying the Federal Reserve and the Federal Deposit Insurance Corporation are acting within the law after the collapse of two U.S. banks raised concerns about the banking sector and roiled world markets.

"The Fed is doing what the Fed is supposed to do. The FDIC is doing what the FDIC is supposed to do in conformance with the law," Representative Patrick McHenry told CNBC, adding Americans should "have confidence in their financial system."

He also said he spoke with FDIC Chairman martin Gruenberg Monday night and was assured that the financial regulator "is ready, willing and able to take any willing and capable buyer" of failed banks.

14 Mar 2023, 07:14:41 PM IST

Wall St opens higher as inflation data boosts smaller rate-hike bets

Wall Street's main indexes opened higher on Tuesday after consumer prices in the world's largest economy grew in line with expectations, bolstering bets of a small interest rate hike by the Federal Reserve at its next meeting.

The Dow Jones Industrial Average rose 236.15 points, or 0.74%, at the open to 32,055.29.

The S&P 500 opened higher by 38.25 points, or 0.99%, at 3,894.01, while the Nasdaq Composite gained 168.89 points, or 1.51%, to 11,357.74 at the opening bell.

14 Mar 2023, 06:54:26 PM IST

Oil prices continue slump in fallout from SVB shutdown

Oil prices fell more than $2 a barrel on Tuesday to their sessions lows, extending the previous day's slide, as the collapse of Silicon Valley Bank rattled equities markets and sparked fears of a fresh financial crisis.

Brent crude futures were down $1.11 or 1.3% to $79.66 a barrel by 1256 GMT, having earlier touched a low of $78.76. U.S. West Texas Intermediate crude futures (WTI) were down $1.24 or 1.6% to $73.56 a barrel, off a low of $72.69.

On Monday, Brent and WTI fell to their lowest since early January and December respectively. Oil prices dropped alongside a continued slide in equities markets. (Reuters)

14 Mar 2023, 06:48:18 PM IST

Wall St set to open higher as inflation data bolsters bets of small rate hike

Wall Street looked set to open higher on Tuesday after consumer prices in the world's largest economy rose in line with expectations, bolstering bets of a smaller interest rate hike by the Federal Reserve at its next meeting.

Data showed that U.S. Consumer Price Index (CPI) rose 0.4% in February versus 0.5% a month ago, while on a yearly basis, it rose 6.0% last month compared with 6.4% the previous month.

The yield on two-year Treasury notes, which best reflect interest rate expectations, tumbled below the 4% mark on Monday and is currently at 4.26%.

Regional bank stocks rebounded in premarket trading. First Republic Bank jumped 59%, a day after the mid-cap lender's executive chair, Jim Herbert, told CNBC the bank has been able to meet withdrawal demands with additional funding from JPMorgan Chase & Co.

Big U.S. banks, including JPMorgan Chase & Co, Citigroup and Wells Fargo, gained between 1.2% and 3.4% after losing ground in the previous session.

Shares of ride-hailing companies Uber Technologies Inc and Lyft Inc rose 6.4% and 6%, respectively, after a California state court revived a ballot measure allowing app-based services to treat drivers as independent contractors rather than employees. (Reuters)

14 Mar 2023, 06:36:58 PM IST

Treasuries slide as nervous traders look ahead to US inflation

Treasuries swung to a loss Tuesday, a sign of traders’ heightened sensitivity to news on the health of the banking system ahead of key inflation data that may determine the Federal Reserve’s next move.

Two-year yields took a huge round trip, initially climbing to 4.19%, then plunging to 3.82% before surging again to 4.27%. That comes as markets resume bets on a potential Fed interest-rate hike next week, having briefly erased all tightening wagers on Monday.

The sharp moves follow the biggest drop in the two-year yield since 1982 on Monday, after the failure of Silicon Valley Bank and other US lenders. Nervousness was reignited Tuesday by Credit Suisse Group AG identifying “material weaknesses" in its reporting procedures, leaving the risk of contagion in investors’ minds.

14 Mar 2023, 06:18:45 PM IST

US annual inflation eases to 6.0%; Futures extend gains

US annual consumer inflation eased in line with expectations to 6.0% in February but remains elevated, according to government data released on Tuesday, adding pressure to the Federal Reserve as it mulls further rate hikes to cool prices at its next meeting.

US stock index futures extended gains amid a moderation in February's consumer prices. At 8:32 am ET, Dow e-minis were up 253 points, or 0.79%, S&P 500 e-minis were up 35.5 points, or 0.92%, and Nasdaq 100 e-minis were up 100.5 points, or 0.84%.

Traders' bets that the US Fed will hold rates at the current level at its March meeting stayed at 23%, while bets of a 25 basis point rate hike stood at 77% earlier.

14 Mar 2023, 06:12:43 PM IST

Euro zone yields higher as markets assess SVB collapse on rate outlook

Euro area government bond yields rose on Tuesday, following sharp drops the previous day as investors weighed the impact of Silicon Valley Bank's (SVB) collapse on the outlook for European Central Bank policy.

Germany's 2-year yield was down by as much as 27 basis points (bps) to 2.425% in early trade, its lowest since Jan. 19. It later pared those gains, leaving the yield up 9 bps at 2.789%.

The 2-year yield, which is highly sensitive to ECB interest rate expectations, stood above 3.3% last week.

14 Mar 2023, 05:54:56 PM IST

Apollo, Blackstone eye SVB assets

Apollo Global Management Inc. and Blackstone Inc. have expressed interest in snapping up a book of loans held by Silicon Valley Bank, the California lender seized by federal regulators last week, people with knowledge of the matter said.

Apollo and Blackstone, two of the world’s largest alternative asset managers, are among investors looking to buy pieces of Silicon Valley Bank, according to the people, who asked not to be identified discussing confidential information.

The bank had $73.6 billion of loans as of Dec. 31, 2022. The size of the loan book Apollo and Blackstone are interested in couldn’t immediately be determined. Blackstone is also looking at other assets it may purchase from the bank, one of the people said, reported Bloomberg.

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