Europe markets close 2.3% lower, bank stocks slide the most in a year after HSBC rescues SVB UK

The fall of HSBC’s share price following news it will buy Silicon Valley Bank’s U.K. subsidiary for £1 ($1.21) is “driven by profit-taking, not fundamental weakness,” UBS analysts said in a note.

HSBC confirmed the acquisition, which excludes the assets and liabilities of SVB U.K.’s parent company Silicon Valley Bank, early Monday.

“We think the 9% fall in the stock since Wednesday is profit-taking and sector rotation not a change in outlook: deposit competition increases the value of the best deposit franchises,” UBS said.

“We see room for unforecast value creation through volumes, cost cuts (US, UK) and potential disposals.”

On the wider banking sector, the analysts said they expected the SVB crisis to lead to more liquidity regulation for banks, an investor preference for larger banks over small ones and for retail-centric banks over commercial-centric ones, and greater competition for deposits leading to lower 2024-25 net interest margins.

April LaRusse, head of investment specialists at Insight Investment, says there’s still “far too much” inflation.

Patrick Armstrong, chief investment officer at Plurimi Wealth LLP, discusses the latest in the SVB fallout, and where the Fed and investors alike could go from here.

Russ Mould, investment director at AJ Bell, weighs in on the unravelling of Silicon Valley Bank.

British bank HSBC will acquire Silicon Valley Bank UK Limited, according to a statement by the Bank of England.

The Bank of England said the action was taken “to stabilise SVBUK, ensuring the continuity of banking services, minimising disruption to the UK technology sector and supporting confidence in the financial system.”

Silicon Valley Bank caused turmoil for the banking sector and markets more widely when it surprised investors on Wednesday with news it needed to raise $2.25 billion to shore up its balance sheet, and that it had sold all its bonds at a $1.8 billion loss.

The bank was then closed by regulators after customers withdrew $42 billion of deposits by the end of Thursday.

HSBC said it will buy SVBUK for £1.

— Hannah Ward-Glenton and Matt Rosoff contributed to this report.

Shares of a U.K.-based technology company that designs custom chips and semiconductors are expected to rise by more than 50% over the next 12 months, according to Barclays Equity Research.

The investment bank said a rapidly growing data center space would “drive sales and profit growth faster than other company in our coverage.”

CNBC Pro subscribers can read more about the semiconductor stock here.

— Ganesh Rao

Silicon Valley Bank went under on Friday, and investor Leon Cooperman thinks this situation is a byproduct of low interest rates from the Federal Reserve.

“This is the result of stupid monetary policy of zero-to-negative rates for a decade,” Cooperman, the head of Omega Advisors, told CNBC’s Scott Wapner.

The Fed cut rates to zero to stabilize the economy after the 2008 financial crisis. Rates remained low for years after until the Fed started to raise in the late 2010s. In 2020, however, the central bank brought rates back down to zero as Covid-19 spread around the world.

Over the last year, the central bank has been hiking rates to stem inflationary pressures.

— Fred Imbert

The world is going through a “rapid and transformational change” when it comes to energy, said Citi, naming four buy-rated stocks as “top picks” in the space.

CNBC Pro subscribers can read more here.

— Weizhen Tan

Regulators scrambled to avert a banking crisis over the weekend, with one key objective being “strengthening public confidence” in the U.S. banking system.

A joint statement from Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and FDIC Chairman Martin Gruenberg said depositors at Silicon Valley Bank and New York’s Signature Bank will have access to all of their money as soon as Monday.

“No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer,” they said.

—Christina Cheddar Berk

Futures extended their gains just before 6:30 p.m. ET after U.S. regulators unveiled a plan to stem the damage from Silicon Valley Bank’s collapse.

Dow futures were last higher by 297 points, or 0.9%. S&P 500 futures jumped 1.1% and Nasdaq Composite futures advanced 1.2%.

— Tanaya Macheel

European markets are heading for a higher open Monday as investors keep an eye on the fallout from the Silicon Valley Bank crisis.

The U.K.’s FTSE 100 index is expected to open 10 points higher at 7,745, Germany’s DAX 82 points higher at 15,477, France’s CAC up 26 points at 7,228 and Italy’s FTSE MIB up 21 points at 27,312, according to data from IG.

Earnings are set to come from Direct Line and there are no major data releases.

— Holly Ellyatt