LIVE Updates: 11 big banks to create $30 bn rescue package for First Republic

After the European Central bank raised interest rates by 50 bps on Thursday, Goldman Sachs lowered its estimate for an interest rate hike by the European Central Bank (ECB) in May to 25 basis points after the central bank raised rates to fight inflation amid calls to rein in policy tightening. The investment bank reduced its estimate from the earlier forecast of 50 bps, pushing its ECB terminal rate forecast to 3.5% from 3.75% previously. The revised forecast comes after the ECB raised interest rates by 50 bps on Thursday.

After the collapse of US banks and Credit Suisse trouble, British banks are also witnessing a pick-up in enquiries to switch cash between institutions.

One of the country’s biggest lenders, Barclays, told Reuters it had experienced an increase in enquiries to switch or open business accounts in the past few days. The sixth largest bank of Britain, Virgin Money, said in a statement that it had also seen “net business deposit inflows in recent days”.

Sam Franklin, CEO of recruitment platform Otta, which has around 70 full-time employees, said the current banking crisis has forced the smaller startups throughout the world to reconsider their sources of finances.

Franklin told Reuters a number of CEOs and startup execs had started looking for other banks with which they can park cash in addition to SVB UK. Barclays has emerged one of their favourite options.

Officials from the Bank of Japan, Ministry of Finance and Financial Services Agency will meet on Friday noon to discuss about markets after the collapse of Silicon Valley Bank, Credit Suisse crisis,etc.

Till now, senior government officials of Japan have played down the impact of regional US banks failure including SVB, etc. However, the meeting will discuss the potential risks to Japan’s economy after recent financial events like the Credir Suisse Group AG turmoil and First Bank turmoil.

Amid the softening of the fears of financial instability due to banking crisis in the west,  Australian shares ended on a higher note on friday. The stock rally was led by energy and banking stocks.

The S&P/ASX 200 index finished 0.4% higher at 6,994.8, but posted a weekly decline of 2.1%, falling for a sixth straight week.

Notably, the global markets suffered heavily after the back-to-back collapse of two US banks followed by Credit Suisse worries. However, the $54 billion rescue from the Swiss National Bank to Credit Suisse and monetary boost to the First Republic Bank managed to bring back the positive market sentiments.

In Sydney, financials rose 0.9%, with the “Big Four” banks up between 0.2% and 1.7%. Among individual stocks, Australian transit operator Kelsian Group fell more than 11% after the company undertook a discounted placement to fund its $325 million acquisition of a U.S.-based bus operator, reported Reuters.

After the First Republic Bank rescue soothed concerns over financial stability, US and European equities futures advanced with Asian shares on Friday.

Not just in west, banking shares also performed well in share markets of Hong Kong, Japan and Australia. Even so, an Asia equity gauge was set for a second weekly loss after the recent turbulence in the banking sector.

Technology stocks were among the best performers on Friday, with the Hang Seng Tech Index rising about 4%. Baidu Inc. climbed about 15%, adding to the positive sentiment after brokerages tested its just-unveiled ChatGPT-like service and granted it their preliminary approval.

The moves in Asia followed the S&P 500 notching its largest one-day advance since January on Thursday as the biggest US lenders agreed to contribute $30 billion in deposits to First Republic. That eased speculation that the bank could be the next to fail after two high-profile demises touched off the crisis last week.

The dollar flipped on Friday after the announcement of relief package to the First Republic Bank on Thursday. On the other hand, several riskier currencies earned some gain after the market sentiment improved due to relief rally.

The rescue effort on First Republic booster risk appetite globally, that made way for surges in the Australian and New Zealand dollars.

The antipodean currencies are traditionally shunned in times of risk aversion. The Aussie jumped 0.79% to $0.6710 in Asia trade on Friday, while the kiwi rose 0.67% to $0.62375, reported Reuters.

The euro’s reaction to the decision was fairly muted, though it gained more ground in Asia trade on Friday, rising 0.32% to $1.0645. Elsewhere, sterling edged 0.28% higher to $1.2144, while the Swiss franc rose 0.3%. Earlier in the week, the Swissie had plunged the most against the dollar in a day since 2015.

Responding to the announcement of $30 billion rescue package to First Republic, Asian share markets advanced in a similar fashion to the Wall Street on Friday.

The rescue package has indicated a confidence of the banking industry on the First Republic Bank, and has cheered the market sentiment to an extent. Chinese markets gained more than 1% while others also rose. U.S. futures edged lower and oil prices climbed.

The S&P 500 jumped 1.8% Thursday, erasing earlier losses. Markets have gyrated this week on concerns over the toll on banks from the fastest set of interest rate hikes in decades. The turmoil flared with last week’s collapse of Silicon Valley Bank, the second largest bank failure in U.S. history.

In Asia, Hong Kong’s Hang Seng jumped 1.8% to 19,545.94 and the Shanghai Composite index surged 1.6% to 3,278.01.

Tokyo’s Nikkei 225 index gained 0.8% to 27,222.25 and the Kospi in Seoul was up 0.8% at 2,396.06. Shares in major Japanese banks, which fell sharply at times this week, were mostly slightly higher.

Australia’s S&P/ASX 200 added 0.3% to 6,985.30. Shares in India and Taiwan also rose.

Calling out upon the $30 billion rescue package created by eleven banks for the First Republic, Bill Ackman said Spreading the risk of financial contagion to achieve a false sense of confidence in FRB is bad policy.

In his recent tweet, he said “US Secretary of Treasury, Janet Yellen had pushed the SIBs to recycle some of the deposits they received from

First Republic back into FRB for 120 days.The result is that FRB default risk is now being spread to our largest banks. Spreading the risk of financial contagion to achieve a false sense of confidence in FRB is bad policy. The SIBs would never have made this low return investment in deposits unless they were pressured to do so and without assurances that FRB deposits would be backstopped if it failed.”

To prevent another collapse of US bank, eleven of the biggest banks in the United States announced a $30 billion rescue package for First Republic Bank on Thursday. The investment has come at a time when the banking sector is heading off a broader crisis.

Notably, First Republic serves as a similar clientele like the collapsed Silicon Valley Bank. SVB failed after depositors withdrew about USD 40 billion in a matter of hours. It appears that First Republic, which had deposits totalling USD 176.4 billion as of December 31, was facing similar issues.

Despite the improvement in situation at stock markets, the long existing crisis at Credit Suisse Group is further accentuated with the departures of several senior executives in its Asia-Pacific equities business. 

The co-head of equities for Asia Pacific and head of equities for Japan in Credit Suisse, Nick Silver will exit the company for a senior role at BNP Paribas SA, reported Bloomberg citing sources familiar with the matter.

Jonathan Jenkins, head of equity sales for the region, and Chris Prasertsintanah, head of equities for South Asia and country manager for Thailand, have also decided to leave, according to the memo.

Silver is joining BNP Paribas as head of Asia-Pacific sales for the prime-brokerage division, which caters to hedge-fund clients, the people said. Murray Parker, a spokesman for the Paris-based bank, declined to comment. Jenkins and Prasertsintanah will also pursue opportunities outside Credit Suisse, the memo said.

Base metal prices made some gains on Friday after the revival of market optimism post Credit Suisse lifeline followed by First Republic Bank Rescue. On the other hand, dollar continued to remain weak.

Three-month copper on the London Metal Exchange rose 0.9% to $8,597.50 a tonne by 0149 GMT, while the most-traded April copper contract on the Shanghai Futures Exchange was up 0.1% to 67,180 yuan ($9,747.82) a tonne, reported Reuters.

Despite the continued crisis around Credit Suisse and SVB, Asian stocks rallied on Friday. The news of First Republic Bank’s rescue has filled the market with optimism despite the unfolding SVB and Credit Suisse crisis.

The MSCI Asia Pacific Financials Index climbed as much as 0.4%, paring its weekly loss to 3.5%. Japanese megabanks were again among the gainers, with Mitsubishi UFJ Financial Group Inc. rising as much as 2% and Sumitomo Mitsui Financial Group Inc. advancing up to 1.6% after the biggest US banks pledged $30 billion of fresh cash for First Republic Bank to ease concerns of a broader crisis. 

In the wake of the problems emerging at the global markets due to bank turmoils like Credit Suisse, and Silicon Valley Bank, Japanese Finance Minister Shunichi Suzuki said on Friday that he was closely watching financial markets in an out of Japan to deal with its repurcussions.

“I’m watching with a great sense of caution” in the wake of problems surrounding some U.S. banks and Credit Suisse, Suzuki told reporters after a cabinet meeting

Asian equities are set to climb after a rescue package for First Republic Bank sparked a rebound in US shares. Treasuries fell after the European Central Bank delivered a rate hike that added to bets the US central bank will also raise next week.

Stock futures for benchmarks in Japan, Hong Kong and Australia rose after declines on Thursday. The S&P 500 notched its largest one-day advance since January after the biggest US lenders agreed to contribute $30 billion in deposits to First Republic, easing speculation that the bank could be the next to fail after two high-profile demises touched off the crisis last week.

(Bloomberg)

Large U.S. banks injected $30 billion in deposits into First Republic Bank on Thursday, swooping in to rescue the lender caught up in a widening crisis triggered by the collapse of two other mid-size U.S. lenders over the past week.

Banking stocks globally have been battered since Silicon Valley Bank collapsed last week due to bond-related losses that piled up when interest rates surged last year, raising questions about what else might be lurking in the wider banking system.

Within days, the market turmoil had ensnared Swiss lender Credit Suisse, forcing it to borrow up to $54 billion from Switzerland’s central bank to shore up liquidity.

(Reuters)

DBRS Morningstar became the first global rating agency to cut Credit Suisse’s credit score on Thursday, less than a day after a major share price plunge saw Switzerland’s central bank provide emergency support to the lender.

The move follows Moody’s earlier saying it will monitor Credit Suisse’s situation and “act appropriately” regarding its rating. (Reuters)

US shareholders of Credit Suisse Group AG sued the Swiss bank on Thursday, claiming that the bank defrauded them by concealing problems with its finances.

The proposed class action accuses Credit Suisse of deceiving investors by failing to disclose that it was suffering from “significant” customer outflows, and that it had material weaknesses in its internal controls over financial reporting. (Reuters) 

Credit Suisse Group AG’s average liquidity coverage ratio, a measure of how much cash-like assets the bank has, did not change between March 8 and March 14, despite the global banking crisis, the Swiss lender said on Thursday.

In a memo to staff with talking points for clients, dated March 16 and seen by Reuters, Credit Suisse wrote that CEO Ulrich Koerner’s comments on March 14 about the bank’s average liquidity coverage ratio having improved to approximately 150% was as per the measure on March 8.

The bank said in a press release on March 16 that the 150% LCR value was as of March 14.

In a statement to Reuters, the bank said that all the data “presented in documents for our clients, colleagues and other stakeholders is correct”, adding that the average LCR ratio was accurate on March 8 and accurate on March 14.

Following a crisis of confidence that wiped 25% off the value of Credit Suisse shares on Wednesday, the bank sought an emergency liquidity line from the Swiss National Bank in the first such move for a global bank since the financial crisis of 2008. (Reuters)

UBS Group AG and Credit Suisse Group AG are opposed to a forced combination, even as scenario planning for a government-orchestrated tie-up continues, according to people with knowledge of the matter.

UBS would prefer to focus on its own wealth-centric standalone strategy and is reluctant to take on risks related to Credit Suisse, the people said, asking not to be identified as the deliberations are private. Its smaller rival is seeking time to see through its turnaround after winning a liquidity backstop from the central bank, they said.

Credit Suisse arrested a collapse in investor confidence on Thursday after winning a 50 billion franc ($54 billion) credit line from the Swiss National Bank. That came after the Swiss lender had appealed to authorities for a public show of support following an unprecedented slump in the shares. With investors jittery after the collapse of Silicon Valley Bank, comments by Credit Suisse’s largest shareholder that it wasn’t willing to invest more in the bank were enough to provoke a deep selloff on Wednesday.

Both UBS and Credit Suisse see a takeover as a potential measure of last resort given the significant hurdles and overlap from such a transaction, the people said. The government and the lenders are running through a whole range of scenarios, and it remains to be seen which additional steps will be taken beyond the liquidity backstop. (Bloomberg)

In the wake of its plan to borrow up to CHF 50 billion, the Swiss lender Credit Suisse tells its staff that this facility does not trigger a “viability event.”

As per the documents seen by Reuters, the bank gave an update on how much money it had returned to investors in its supply chain finance funds, according to the document dated March 16.

Credit Suisse’s document gives talking points to staff for client conversations.

While hiking key rates by 50 bps, the European Central Bank said the recent tensions imply additional uncertainty around the baseline assessments of inflation and growth.

In a statement, ECB said, the Governing Council is monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability in the euro area.

It said, “the euro area banking sector is resilient, with strong capital and liquidity positions. In any case, the ECB’s policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy.”

Further, the new ECB staff macroeconomic projections were finalized in early March before the recent emergence of financial market tensions.

As such, ECB said, “these tensions imply additional uncertainty around the baseline assessments of inflation and growth. Prior to these latest developments, the baseline path for headline inflation had already been revised down, mainly owing to a smaller contribution from energy prices than previously expected.

ECB staff now see inflation averaging 5.3% in 2023, 2.9% in 2024, and 2.1% in 2025. At the same time, underlying price pressures remain strong.

In the wake of its collapse, US treasury secretary Janet Yellen on Thursday said that Silicon Valley Bank had a very high ratio of uninsured depositors. She added that uninsured depositors are not protected without systematic risk determination.

According to her, deposits in the US banks will be guaranteed only if a systematic risk determination is issued. Also, she said, uninsured deposits in SVB that are now protected may involve certain funds from foreign firms.

She revealed that depositors have showed concerns about SVB.

Further, as per reports, she said that much of the investigations in SVB will be carried by Federal Deposit Insurance Corporation (FDIC).

Post the shutdown of the Silicon Valley Bank, the California department has appointed FDIC as the receiver.

Data from FDIC showed that as of December 31, 2022, SVB’s total assets stood at $209.0 billion — while its total deposits were approximately around $175.4 billion. About 89% of the bank’s total deposits are uninsured.

However, Yellen also told the Senate Finance Committee that the country’s banking system “remains sound” and citizens can feel confident about their deposits.

Wall Street showed volatility on Thursday as smaller US banks continue to see a downward slope. Investors are likely hunting for the next crack in the troubled banking sector. However, the downside in the US indexes was broadly limited.

In early trade, Dow Jones Industrial Average was down 216 points, while Nasdaq Composite and S&P 500 were marginally down.

At the time of writing, Dow Jones recovered some losses and traded marginally up. While S&P 500 and Nasdaq gained by a percent.

US market came under pressure after a series of bank failures such as Silicon Valley Bank and Signature Bank. Also, Swiss lender Credit Suisse reported mounting losses and material weakness in its internal control which further dampened the mood in the sector.

Currently, Credit Suisse is looking to restore market confidence in them through its liquidity-raising plan.

One of the leading rating agency, Moody’s believe that Switzerland can manage recent banking sector shocks such as the one of Credit Suisse. The American credit rating agency is comfortable with the highest rating it holds for Swiss sovereign debt.

On Thursday, Credit Suisse announced its plan to borrow CHF 50 billion from Swiss National Bank. Overall, the company has announced $54 billion liquidity infusion plan.

Diemar Hofrnung, associate managing director at Moody’s Investor Service said, “The stable outlook on Switzerland’s Aaa rating reflects our expectation that Switzerland’s very strong economic fundamentals, ample fiscal space and its highly effective institutions will allow it to effectively manage shocks such as the current one that affects banking systems globally,” as reported by Bloomberg.

European markets erased their early gains on Thursday after the European Central Bank hiked interest rates by 50 bps in the midst of troubles surrounding Credit Suisse and other U.S banks.

The STOXX 600 was hovering near a 10-week low, erasing at least over 1% of gains that were recorded in early trade. While the banks’ sector index dipped as well.

The banking sector index is headed for about 11% for the current week, while STOXX 600 is on track to slip by around 4%.

In its policy statement, ECB said that inflation is likely to remain too high for too long.

Credit Suisse has received a liquidity lifeline from the Swiss National Bank. This was a much needed confidence that investors needed as markets eased on Thursday. Noteworthily, following this development, JP Morgan Chase analysts sees a possibility of takeover of the troubled Switzerland-based lender.

As per a Bloomberg report, analysts led by Kian Abouhossein at JP Morgan laid out three scenarios for Credit Suisse’s future, with the most probable being an acquisition by UBS Group AG.

The analysts also pointed out that Credit Suisse’s capital position isn’t an issue, but the situation is about ongoing market confidence issues with its IB strategy and ongoing franchise erosion. Additionally, status quo in Credit Suisse is no longer an option.

A rebound in Europe’s battered banking shares was beginning to wane on Thursday, as a 50 billion Swiss franc ($53.94 billion) lifeline for beleaguered lender Credit Suisse teed up a pivotal European Central Bank interest rate decision.

Credit Suisse’s shares were still up more than 20% after the Swiss National Bank and financial regulator, FINMA, had rowed in with support, but the broader European banking sector had given back much its 2.5% morning rally with the ECB now looming.

The SNB confirmed on Thursday that it will provide “liquidity” to the lender. Credit Suisse, which said it is taking “decisive action”, will borrow up to 50 billion Swiss francs from one of the world’s leading central banks.

The euro and Swiss franc regained some lost ground on Thursday, as markets reacted positively to the Swiss central bank extending support to Credit Suisse, ahead of a difficult meeting for European Central Bank rate setters.

The euro was up 0.28% at $1.0608. On Wednesday it had lost 1.4% – its biggest percentage fall in six months – as the focus of fears about the banking sector spread from the collapsed U.S.-based Silicon Valley Bank to the much larger Credit Suisse.

Some calm was restored to markets after the Swiss lender said it would borrow up to $54 billion from the Swiss National Bank to shore up liquidity and investor confidence after the bank’s shares plunged as much as 30% on Wednesday.

That helped the Swiss franc to strengthen, and the dollar at one point fell more than 1% against the franc, to 0.9232, reversing some of its 2.15% surge on Wednesday – the largest daily gain since 2015.

Wall Street drifted lower before the bell Thursday, even as European shares got a boost after Credit Suisse said it would borrow up to $54 billion from Switzerland’s central bank to shore up its finances, possibly easing worries about a bank crisis following the failure of two U.S. lenders.

Futures for the Dow Jones Industrial Average were off 0.3% before the bell and futures for the S&P 500 dipped 0.1%.

Credit Suisse’s shares soared 30% on Thursday after it announced the loan, bolstering confidence as fears about the banking system moved from the U.S. to Europe.

It was a massive swing from a day earlier, when shares of Switzerland’s second-largest commercial bank plunged 30% on the SIX stock exchange after its biggest shareholder said it would not put more money into Credit Suisse.

That dragged down other European banks after the collapse of some U.S. banks stirred fears about the health of global banks. European bank shares recovered a bit Thursday, with the Euro Stoxx Banks index of 21 leading lenders up 1.6%, following a steep 8.4% drop Wednesday. Bank stalwarts like Commerzbank, Santander, Unicredit and Raiffaisen all rose more than 2%.

Switzerland’s second largest political party on Thursday called for more transparency around how Credit Suisse’s crisis came about and demanded those responsible be held accountable.

“We could have seen this coming,” said Cederic Wermuth, the co-president of the Social Democrats at a conference. “We demand that those responsible really be held accountable.”

The political party said it agreed with the Swiss National Bank’s decision to step in, but said it wants the public sector to be compensated for the risk.

Asian policymakers and regulators sought to reassure investors on Thursday about the resilience of their banking systems and played down contagion risks after a crisis of confidence in the global banking sector triggered a market sell-off.

A plunge in shares of Credit Suisse on Wednesday sparked fears of a full-blown banking crisis. The bank on Thursday announced it would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss central bank.

The Credit Suisse development came a week after the collapse of a start-up lender in California.

Australian Treasurer Jim Chalmers on Thursday said that local banks were well capitalised. He had convened a meeting this week between major regulators and the central bank after the collapse of Silicon Valley Bank.

Gold edged higher on Thursday, helped by a weaker dollar, but prices held below last session’s 6-week peak as risk sentiment improved after Credit Suisse, the latest focal point of a potential banking crisis, secured funds.

Spot gold rose 0.3% to $1,924.15 per ounce by 1122 GMT, after jumping to its highest since early Feb at $1,937.28 on Wednesday. U.S. gold futures fell 0.1% to $1,928.70.

Credit Suisse, which sparked a rout in European banking stocks on fears of its collapse, recovered 28% after saying it would borrow up to $54 billion from the Swiss central bank to shore up liquidity and investor confidence.

While the news had taken a bit of the shine off gold, bullion seems to have settled at a reasonably firm level, said independent analyst Ross Norman.

The dollar index was 0.2% lower, making bullion cheaper for overseas buyers. Gold prices in sterling were off the record-highs hit on Wednesday, while prices in euros also retreated

Credit Suisse Group AG sought to arrest a collapse in investor confidence Thursday by opening a 50 billion Swiss franc credit line with the country’s central bank and offering to buy back debt, as executives and government officials plot the next steps for the troubled lender.

Shares in Credit Suisse surged as much as 40%, the most on record, after the open in Zurich on Thursday before paring gains. Along with the repurchase of up to three billion francs of dollar- and euro-denominated debt, the bank arranged the collateralized credit line with the Swiss National Bank after a record slump in its share price Wednesday. The bank has not yet needed to use the facility for liquidity, according to a person familiar with the matter, reported Bloomberg.

Oil rose from the lowest close in 15 months after a three-day rout started by the US banking crisis and accelerated by options covering.

West Texas Intermediate futures traded near $68 a barrel after tumbling around 12% over the previous three sessions. The turmoil whipped up by the collapse of Silicon Valley Bank and fresh upheaval at Credit Suisse Group AG has reverberated across global assets, with selling in oil gathering pace as firms tried to limit their exposure in the options market.

OPEC’s top official earlier this month flagged concerns about slowing demand in Europe and the US, and investors will be watching to see if the rout draws a response from the group and its allies. However, traders are abandoning bets that the Federal Reserve will raise interest rates amid the banking turmoil.

Further oil price gains may be limited in the near term, with OPEC this week forecasting a modest surplus in the second quarter, a typical period of soft demand before the summer. The International Energy Agency on Wednesday said that the market was already in surplus on Russian output.

A long-term timespread for global benchmark Brent has weakened during the recent selloff, narrowing to $2.94 a barrel in backwardation on Wednesday. That compares with $5.26 at the end of last week.

European stocks staged a partial rebound on Thursday as bank shares rallied after Credit Suisse Group AG said it would borrow money from Switzerland’s central bank and seek to repurchase debt.

The Stoxx Europe 600 index climbed 0.8% after yesterday’s near-3% plunge as the news from Credit Suisse provided a measure of calm for jittery investors. A gauge of bank stocks climbed 2%, recovering some of yesterday’s 6.9% loss. C

The Swiss government will hold a special meeting on Thursday to discuss the situation at Credit Suisse a day after shares in the country’s second-biggest bank plunged to record lows.

The turbulence around Switzerland’s second largest bank spurred the seven-member Federal Council to move up a meeting scheduled for Friday by a day, Swiss news agency ATS reported, citing sources close to the government.

The Swiss National Bank confirmed on Thursday that it will provide liquidity to Credit Suisse against sufficient collateral.

“Within the framework of its statutory mandate, the SNB may provide liquidity to a domestic bank against collateral,” the central bank said in response to questions from journalists.

Credit Suisse said early on Thursday it would make use of a $54 billion loan from the SNB to shore up liquidity and investor confidence.

London shares rose on Thursday as banking stocks rebounded after Credit Suisse said it would borrow funds from the Swiss central bank, injecting some confidence in the sector, while Rentokil jumped after posting a higher profit.

UK’s blue-chip FTSE 100 gained 0.4%, rebounding from its steepest fall in over a year on Wednesday.

British banks gained 1.8%, after falling 5.6% in the previous session.

Credit Suisse jumped nearly 20% on plans to borrow up to $54 billion from the Swiss National Bank (SNB) to shore up liquidity and investor confidence.

British finance minister Jeremy Hunt said that he was encouraged by the news.

Lenders HSBC and Barclays gained 1.9% and 2.7% respectively.

European shares advanced Thursday following a retreat in Asia after Credit Suisse said it would borrow up to $54 billion from Switzerland’s central bank to shore up its finances, possibly easing worries about a bank crisis following the failure of two U.S. lenders.

London, Frankfurt and Wall Street futures gained. Shanghai, Tokyo and Hong Kong declined as Asian bank stocks slid, reversing Wednesday’s gains. Oil prices rose.

Wall Street’s benchmark S&P 500 lost 0.7% on Wednesday after Credit Suisse shares fell 30%. That fueled jitters about global banks that are under strain following interest rate hikes by the Federal Reserve and other central banks to cool inflation.

In early trading, the FTSE 100 in London gained 1.4% to 7,447.53. The DAX in Frankfurt jumped 1.7% to 14,988.39 and the CAC 40 in Paris added 1.7% to 6,999.23. The Swiss Market index was up 1.2%.

On Wall Street, the future for the benchmark S&P 500 index was up 0.1%. That for the Dow Jones Industrial Average was unchanged.

In Asia, the Nikkei 225 in Tokyo retreated 0.8% to 27,010.61. Mizuho Bank was down 3.9%, while Resona Holdings, a major second-tier bank, lost 4.8%.

The Hang Seng in Hong Kong shed 1.7% to 19,203.91. Standard Chartered Plc lost 5.4% and HSBC was 2.4% lower.

The Shanghai Composite Index lost 1.1% to 3,226.89 after government data Wednesday showed the Chinese economy is recovering more slowly than expected following the lifting of anti-virus controls.

Credit Suisse Group AG is grappling with the departures of several senior executives in its Asia-Pacific equities business as worries about the bank’s financial health roil global markets.

Nick Silver, co-head of equities for Asia Pacific and head of equities for Japan is leaving along with Jonathan Jenkins, head of equity sales for the region, reported Bloomberg.

Chris Prasertsintanah, head of equities for South Asia, and country manager Thailand, has also decided to leave, reported the news agency according to a memo seen by it.

The three will look to pursue opportunities outside the bank, the memo said.

Shares of embattled Credit Suisse skyrocketed Thursday after it received $54 billion lifeline from Swiss Bank. The announcement calmed the market and helped its stock regain track after facing its worst trading day in its history.

Credit Suisse’s shares have soared 30% after it announced it will move to shore up its finances by borrowing up to nearly $54 billion from the Swiss central bank, reported AP.

Shares in Switzerland’s second biggest bank opened up 32.59 percent to 2.22 Swiss francs a share, after seeing its share fall as much as 30 percent on Wednesday amid fears of a global banking crisis.

“At times like this it is important to focus on facts and and reinforce the strengths of the bank,” Credit Suisse Group, CEO Ulrich Koerner, told the company employees in a memo on Thursday.

The embattled CEo stressed upon the need to have an effective communication with clients and external stakeholders to maintain the strengths of the bank. He also mentioned that clear communication is of essence to convey its stake holders about the strategy and accelerated progress of the company.

“Effective communication is key to ensure that our clients and external stakeholders understand the strengths of the bank, our strategy and the accelerated progress we are making to create the new Credit Suisse,” he said on the memo, reported Bloomberg.

The liquidity offered by the Switzerland National Bank to Credit Suisse is encouraging, said the UK Finance Minister Jeremy Hunt on Thursday.

“Obviously, I was following the situation. The governor of the Bank of England is following it very closely,” Hunt told Sky News television, reported Reuters.

“I think the news we’ve heard from the Swiss authorities this morning is encouraging, but I won’t say any more than that,” he added

Credit Suisse Group AG is more relevant to India’s financial system than Silicon Valley Bank (SVB), according to Jefferies who sees that the fate of the European lender is of greater importance to the Indian banking sector than the collapse of SVB.

“Given the relevance of Credit Suisse to India’s banking sector, we see softer adjustments in assessment of counter-party risks, especially in the derivative market. We expect Reserve Bank of India (RBI) to keep close watch on liquidity issues, counter-party exposures and intervene as necessary. This may also lead to institutional deposits moving more towards larger/ quality banks,” the note stated. Read full report here.

After sliding to their 15-month low level, oil prices regained some value on Thursday after Credit Suisse managed to earn the confidence with the $54 billion investment from Swiss National Bank.

However, the market sentiment continued to remain low amid the fears of a deepening financial crisis for banks worldwide. 

As of 0639 GMT, Brent crude futures were up 59 cents or 0.8% to $74.28 per barrel. West Texas Intermediate crude futures (WTI) rose 49 cents or 0.7% to $68.10 a barrel, reported Reuters.

Continuing its third day of decline on Wednesday, US crude oil fell below $70 a barrel for the first time since December 20, 2021. Brent has lost nearly 10% since Friday’s close, while U.S. crude is down about 11%.

Ruling out any other adverse situation of Credit Suisse Group AG, the chief of its top shareholder Saudi National Bank has said the bank is generally “sound.”

Ammar Al Khudairy, chairman of Saudi National Bank, also firmed his stance by mentioning the Swiss National Bank’s confidence on Credit Suisse. He also called the market panic around the financial stocks in last 24 hours as “completely unwarranted.”

“If you look at what even the Swiss National Bank said yesterday with all the ratios, they’re all sound, everything is fine,” Ammar Al Khudairy said in an interview with CNBC broadcast Thursday, reported Bloomberg.

 “I don’t think they’ll need more capital,” he added.

Notably, Al Khudairy’s statement that his institution for regulatory reasons couldn’t increase stake in the Zurich-based bank led to the biggest ever slump in Credit-Suisse’s shares on Wednesday. Situation came under control after the interruption of Swiss National Bank that announced to show support and a credit line of up to 50 billion Swiss francs ($54 billion).

Credit Suisse Group AG will probably overcome its financial distress but the blow to investor confidence may reverberate for years, according to ACY Securities.

“Credit Suisse is very likely to survive this though it will be badly mauled for many years to come,” Clifford Bennett, chief economist for ACY Securities, wrote in a note Thursday.

The comments were released just before Credit Suisse said it’s planning to borrow as much as 50 billion francs ($54 billion) from the Swiss National Bank, with an offer to repurchase up to approximately 3 billion francs of dollar- and euro-denominated debt.

The latest development helped allay extreme fears, with US and European equity futures advancing Thursday in Asia. Credit Suisse’s shares plunged by a record Wednesday after its largest shareholder, the Saudi National Bank, said it wouldn’t be adding to its existing stake in the troubled bank.

While Credit Suisse has been working to alleviate concerns about its financial health for months, the collapse of Silicon Valley Bank triggered renewed anxiety about lenders.

(Bloomberg)

As the safe havens of the US and Europe suffers due to crisis, investors witch-hunt for safe investment spot has raised the demand for the yen. The yen is regaining its crown as the go-to haven.

Japan’s currency has outperformed all its Group-of-10 counterparts in the past five days as traders sought the safest assets amid a surge in volatility, reported Bloomberg. On the contrary, a gauge of the dollar plunged 0.7% in the immediate aftermath of Silicon Valley Bank’s collapse. On the other hand, Swiss franc dropped as much as 2% on Wednesday.

“The yen is being seen as a safe haven again, and there appear to be very few of those at the moment,”Andrew Ticehurst, a rates strategist at Nomura Holdings Inc. in Sydney told Bloomberg. He believes that the impact of SVB fallout on US dollar and Credit Suisse problem on ECB can make yen a safe spot for investors.

As isolation from global rate environment and limited sovereign exposures help Chinese banks shelter from the global banking crisis, investors are rushing to Chinese banking shares to save their investments. 

The CSI 300 Financials Index has gained about 0.3% so far this week, beating a more than 3% decline in an index of regional counterparts, while a gauge of US lenders has lost 12%, reported Bloomberg.

There has been an appreciable gain in state-owned lenders. Shares of Bank of China Ltd in Shanghai continued its four-day rising streak on Thursday and attained its highest level since July 2020. Market experts believe that state-owned enterprises backed by the state that are too big to fail. This fact is making China, a lucrative option for investors.

After a muted start at Indian stock market shares due to Credit Suisse turmoil, the Indian rupee fell by 10 paise to 82.75 against the US dollar in early trade on Thursday. The minute fall aligns with the negative trends in the domestic as well as global equity markets.

At the interbank foreign exchange, the domestic unit opened weaker at 82.77 against the US dollar and traded in the range of 82.80 and 82.71.

Later, the Indian rupee registered a fall of 10 paise and was trading at 82.75 against the US dollar. The Indian currency closed at 82.65 against USD on Wednesday.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was 0.10 per cent lower at 104.54.

Following its Asian peers, Indian stock markets kicked off a muted start on Thursday, as investors are eyeing upon how the Credit Suisse turmoil will unfold in the day. Credit ssuisse is one of Europe’s top lenders and has added to worries about a crisis in the financial sector.

Sensex was down by 200 pts, and Nifty was hovering near 16900 during the opening session on Thursday. Metal stocks also showcased a downward trend. Track latest updates of stock market here.

Safe haven currencies like the U.S. dollar and the yen were in demand on Thursday on renewed fears of a global banking crisis, after contagion from the implosion of U.S.-based Silicon Valley Bank spread across the Atlantic to Swiss bank Credit Suisse.

In the latest blow to investors’ confidence in the financial sector, Credit Suisse’s shares on Wednesday plunged as much as 30%, after its largest shareholder said it could not provide further support to the bank.

The rout in its shares prompted the Swiss National Bank to throw a financial lifeline to the embattled lender, and Credit Suisse said on Thursday it intended to borrow up to 50 billion Swiss francs ($54 billion) from the bank.

(Reuters)

Japan’s Nikkei share average trimmed losses on Thursday, in another volatile session after embattled Swiss lender Credit Suisse announced plans to strengthen its cash position.

The week has seen wild swings in Japanese banks, causing the Nikkei to fall below 27,000 for the first time since Jan. 23, on fears of contagion from the Silicon Valley Bank meltdown and Credit Suisse’s woes.

The Nikkei was last down 1.2%, with losses over the past five days exceeding 7%.

Credit Suisse said on Thursday it was taking “decisive action” to strengthen its liquidity by exercising its option to borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank.

The Nikkei index was last down 315.1 points at 26,914.38, with banks down 4.15%. Among the biggest losers were Sumitomo Mitsui Trust Holdings Inc, down 6.8% and Japan Post Bank Co Ltd, down 5.5%.

The broader TOPIX index was 1.5% weaker at 1930.27.

(Reuters)

Asian shares headed for declines after US equities fell and government bonds and the dollar rallied as fresh turmoil at Credit Suisse Group AG roiled markets.

Australian and Japanese stocks and Hong Kong futures dropped. The financial sector was among the hardest hit in Japan’s Topix Index and Australia’s S&P/ASX 200 benchmark. Contracts for US stocks showed fledgling signs of stability after the S&P 500 fell 0.7% Wednesday. The US benchmark pared earlier losses after Switzerland’s central bank said Credit Suisse would receive a liquidity backstop if needed.

Tech stocks offered a bright spot. Nasdaq 100 futures advanced after a gain on Wednesday as traders forecast interest rates to climb less than previously expected.

The KBW Bank Index, one of the broadest measures of the US banking system, fell 3.6%, undoing a rally from the prior session. First Republic Bank shares fell more than a fifth after being cut to junk by two credit firms, dragging its decline over the past week to more than 70%. JPMorgan, the largest US bank by value, fell 4.7%.

(Bloomberg)

To manage its current crisis, Credit Suisse Group AG on Thursday said it will borrow up to $54 billion from the Swiss National Bank, to strengthen its liquidity.

The move can be considered as a part of its decisive action to tackle the current crisis. Notably, Credit Suisse lender’s shares nosedived by 30% on Wednesday. 

The bank said that the additional liquidity would support Credit Suisse’s core business and clients as the bank takes necessary steps to create a simpler and more focused bank built.

Credit Suisse said the borrowing will be made under the covered loan facility and a short-term liquidity facility, and it will be fully collateralised by high quality assets. The bank also announced offers for senior debt securities for cash of up to 3 billion franc.

Santander Consumer USA on Wednesday postponed the sale of bonds worth $942 million that are backed by subprime auto loans as the deepening Credit Suisse Group AG crisis added to turmoil in debt markets, Bloomberg News reported on Wednesday.

The $942 million sale, led by Citigroup Inc, was part of a larger asset-backed securities (ABS) deal valued at $1.3 billion, where Santander Consumer was retaining some of the securities, the report said.

The underwriters informed investors that the deal would be postponed due to “market volatility”, and the issuer would consider revisiting the trade at a later time, the report added.

(Reuters)

The biggest US banks have been whittling down their direct exposure to Credit Suisse Group AG for months as the Swiss lender stumbled from one crisis to the next.

Regulators this week have amped up queries with firms including JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. about those exposures, which are now minimal, according to people familiar with the matter. The US firms have been examining and managing their counter-party exposure to Credit Suisse while still working with the Swiss lender, the people said, asking not to be identified discussing internal deliberations.

Representatives for all three banks declined to comment.

Switzerland’s second-largest lender has been pummeled over the last several years by blowups, scandals, leadership changes and legal issues. Its stock plummeted Wednesday after its biggest shareholder ruled out increasing a stake because of regulatory constraints. Swiss authorities are in talks about ways to stabilize the bank, Bloomberg News reported.

(Bloomberg)

Bernie Sanders said that “everybody is concerned” about the impact of Credit Suisse’s problems on the US banking system. (Reuters)

Renewed unease gripped world markets on Wednesday as news that Credit Suisse’s largest investor said it could not provide the Swiss bank with more financial assistance sent its shares and broader global equities sliding.

U.S. inflation data showed signs of economic weakness and cooling inflation.

Yields on U.S. Treasuries and euro zone bonds tumbled on renewed turmoil in banking stocks and shifting interest rate expectations. Gold prices renewed their recent rally as investors sought safe havens.

Oil prices plunged more than $5 a barrel to their lowest in more than a year.

Concern over further banking sector instability and closely watched inflation data published on Wednesday raised expectations the Federal Reserve may pause or slow down hiking rates.

Credit Suisse shares tumbled 24.2%, falling below 2 Swiss francs ($2.18), after the lender’s biggest shareholder said it could not raise its stake beyond 10%, citing regulatory issues. U.S.-listed shares of Credit Suisse hit a record low. (Reuters)

Swiss financial regulator FINMA and the nation’s central bank said on Wednesday that the Swiss National Bank would provide Credit Suisse liquidity “if necessary”, a first for a global bank since the financial crisis.

The two institutions said in a joint statement that Credit Suisse “meets the capital and liquidity requirements imposed on systemically important banks”.

The comments come after the bank’s stock plunged more than 30% on Wednesday and follow months of turmoil. Governments and at least one bank were putting pressure on Switzerland to act, said people familiar with the matter.

The SNB and FINMA also said “there are no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the U.S. banking market.”

The Swiss lender would be the first globally systemically important bank to receive a bespoke lifeline, compared with liquidity offered by central banks to the financial sector generally in times of extreme market stress, such as when economies went into lockdown to combat COVID-19.

Shares in Credit Suisse, which is battling to recover from a string of scandals that have undermined the confidence of investors and clients, lost nearly a quarter of their value on Wednesday.

The bank’s shares have taken a battering over the last 12 months, losing nearly three quarters of their worth to plunge to all time lows. The stock, which was worth around 80 Swiss francs in 2008 plunged to 1.55 Swiss francs on Wednesday. (Reuters)

Credit Suisse customers in Geneva were not spooked by the bank’s plunge on the stock exchange Wednesday, believing the Swiss government would ride to the rescue before it could ever collapse.

Emerging from the bank’s headquarters branch, in a prime location on the Rhone riverside in the central shopping and business district, customers were largely unruffled by the bank’s share price tumbling more than 30 percent during the day to 1.55 Swiss francs.

“It will be covered by the government, under 100,000 Swiss francs” per customer, said a 40-year-old personal trainer, who declined to give his name.

“Someone will buy the bank anyway.”

The bank’s international activities, rather than its Swiss domestic banking branch, are the greater source of worry, he added.

Share prices nosedived after Ammar Al Khudairy, chairman of Credit Suisse’s main shareholder Saudi National Bank, said it would “absolutely not” up its stake.

Another customer stepping outside into the spring sunshine said he thought the bank would stay afloat because it is one of the 30 “global systemically important banks” deemed too big to fail. (AFP)

The US Treasury Department is monitoring the Credit Suisse situation, a spokesperson said Wednesday, after the bank’s biggest shareholder ruled out boosting its stake and the stock fell the most on record.

The Treasury is in touch with its global counterparts, the spokesperson said.

For global investors still on edge after the rapid-fire collapse of three regional US banks, the growing crisis at Credit Suisse Group AG has added to concerns about financial stability.

The Zurich-based lender, which is in the middle of a complex three-year restructuring, has been struggling to contain deposit outflows. The cost of credit derivatives linked to Credit Suisse are blowing out to levels reminiscent of the financial panic of 2008. (Bloomberg)

Startups from Silicon Valley to London, Tel Aviv and tech hubs across Africa depended on Silicon Valley Bank as a one-stop shop for everything, from holding their fortunes to personal mortgages. Now, the bank’s failure has forced them to navigate a new world of banking just as the financial markets tip into chaos.

Even if the bank continues under a new name, investors and tech firms alike see a future that is significantly more difficult. Deals ranging from venture debt financing to funding rounds are likely to be impacted by recent days’ upheaval. And just as startups are trying to move their money around and searching for new, safer banks, the entire financial sector is in turmoil with Credit Suisse Group AG plunging to the lowest level on record and dragging other major institutions down with it.

Race Capital general partner Edith Yeung said that venture capital transactions will likely be delayed or even scrapped amid the bedlam. “I’m sure there were deals made last week that are now not going to happen,” she said after SVB melted down. “This is a huge disruption to the venture space.”

Many in the tech industry are still mourning the undoing of SVB, and lamenting the future difficulty of working with bigger banks unfamiliar with the unique needs of young tech companies. Sequoia Capital’s Mike Moritz compared its failure to a “death in the family” in a column. And fears of contagion across the broader banking system only stand to make matters worse for the sector. Yeung said VCs are going to have to ask more questions of their banks. (Bloomberg)

Switzerland is under pressure from at least one major government to intervene quickly on Credit Suisse, a source familiar with the situation told Reuters, after the Swiss bank led a rout of European bank stocks on Wednesday.

Credit Suisse shares dropped by as much as 30.8%, leading a 7% fall in the European banking index, while five-year credit default swaps (CDS) for the flagship Swiss bank hit a new record high, reviving fears of a broader threat to the financial system.

Two supervisory sources told Reuters that the European Central Bank (ECB) had contacted banks on its watch to quiz them about their exposures to Credit Suisse.

One of the sources said, however, that they saw Credit Suisse’s problems as specific to that bank, rather than being systemic.

The U.S. Treasury is monitoring the situation around Credit Suisse and is in touch with global counterparts about it, a Treasury spokesperson said on Wednesday. Asked about the impact of Credit Suisse’s problems on the U.S. banking system, U.S. Senator Bernie Sanders told Reuters: “Everybody is concerned.”

Europe’s bank index has seen more than 120 billion euros evaporate ($127 billion) in value since March 8. Among the biggest decliners on Wednesday were French lenders Societe Generale, down 12%, and BNP Paribas, off 10%.

Banking stocks have been on a roller-coaster ride this week, tumbling at the start of the week in the face of assurances from U.S. President Joe Biden before jumping on Tuesday on hopes the worst of the market rout was over. (Reuters)

A jump in the costs for Wall Street banks to insure bonds against default on Wednesday were another worrisome indicator of credit stress for investors as regulators try to shore up balance sheets to dispel worries about contagion from the crisis at Credit Suisse and U.S. regional banks.

According to data from S&P Global Market Intelligence, spreads on five-year credit default swaps on JPMorgan Chase & Co , Bank of America Corp, Morgan Stanley and Wells Fargo shot up to their highest since October last year, while those for Goldman Sachs and Citigroup Inc leapt to their highest since November.

“Credit spreads are telling you there is systemic risk in the system,” said Lance Roberts, chief investment strategist at RIA Advisors.

Financial stocks and bonds have shed hundreds of billions of dollars in value since the demise of SVB Financial Group and Signature Bank rocked global markets and impaired virtually every asset class.

Tech-lender SVB, which operated as Silicon Valley Bank, collapsed last week after a bank run on its deposits that led to $42 billion of outflows in a single day. It was the worst since Washington Mutual went bust in the global financial crisis of 2008.

In addition, Swiss bank Credit Suisse shed a quarter of its value on Wednesday. Its plunging stock price has piled up on worries among investors about the resilience of the global banking system. (Reuters)

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)

Gold prices climbed over 1% to their highest since early February on Wednesday as a fresh crisis in the banking sector turned investors away from seemingly riskier assets and drove them to the safety of bullion.

Spot gold jumped 1.2% to $1,924.63 per ounce by 11:56 a.m. EDT (1556 GMT). U.S. gold futures gained 1.1% to settle at $1,931.30.

Europe’s bank stocks came under pressure again, with Credit Suisse shares sliding after its largest investor said it could not provide the Swiss bank with more financial assistance.

“It’s a total safe-haven trade. There’s a lot of concern about Credit Suisse and now European banks are really coming under quite a bit of pressure. So it’s a complete flight to safety,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Gold prices in sterling hit a record high while bullion in euros also spiked towards all-time peaks hit last year. (Reuters)

In the meantime, Credit Suisse has appealed to the Swiss National Bank for a public show of support, following its shares cratered as much as 30 per cent that sparked a broader sell-off in European and US bank stocks, reported Financial Times.

Credit Suisse has also asked for a similar response from the Swiss regulator Finma, however, nor Swiss National Bank neither Finmam had yet decided to intervene publicly, added the report.

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)

Credit Suisse shares dropped by as much as 30.8%, leading a 7% fall in the European banking index, while five-year credit default swaps (CDS) for the flagship Swiss bank hit a new record high, reviving fears of a broader threat to the financial system, reported Reuters on Wednesday.