Credit Suisse to borrow £44.5bn after crash amid fears of economic crisis
Credit Suisse will borrow up to £44.5bn from the Swiss National Bank to strengthen its liquidity, the lender said.
The troubled banking giant said it was taking decisive action to shore up its finances after its shares nosedived 30 per cent on Wednesday.
Shares in the Swiss bank plummeted after its top shareholder Saudi National Bank said it would not provide any further financial assistance. However, Swiss regulators announced that the country’s central bank would give Credit Suisse liquidity if needed, helping mitigate earlier concerns.
This comes after Wall Street expert Robert Kiyosaki, famed for predicting the Lehman Brothers’ failure, pegged Credit Suisse as the next major bank most likely to collapse.
The concerning outlook for the bank comes as SVB – whose Friday collapse sparked concerns of a financial crisis – is back open for business.
New CEO Tim Mayopoulos urged customers to return to the bank, saying it is now opening new accounts and making new loans. He served as CEO of Fannie Mae bringing it back to profitability after the 2008 financial crisis.
Six regional financial institutions remain under tight scrutiny but the response from regulators to protect depositors appears to have addressed market concerns.
Key Points
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Dow Jones closes 280 points lower, dogged by fears for future of Credit Suisse
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DOJ and SEC to probe stock sales ahead of Silicon Valley Bank collapse, report says
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‘Rapid deterioration’ of operating environment sees Moody’s cut US banking outlook
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New York State Department of Financial Services takes over Signature Bank
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Biden to ask Congress ‘to strengthen the rules for banks’
Premium: Has enough been done to calm Wall Street over the banking crisis?
05:15 , Oliver O’Connell
James Moore wrote this week:
Just what we needed right now: another banking crisis. But after the bloodbath at the beginning of the week, a rally quickly got underway. Regional banks in the United States – in real danger of experiencing a run on their deposits while larger rivals benefit from inflows – found some support.
Perhaps Wall Street’s nail-biters had worked out that the doomed Silicon Valley Bank (SVB) had a rather unique financial and client structure. Ditto New York-based lender Signature, which shut down over the weekend. Interventions by the US Federal Reserve do seem to have helped calm nerves.
Has enough been done to calm Wall Street over the banking crisis?
Credit Suisse to borrow up to £44.5bn
04:56 , Alisha Rahaman Sarkar
Credit Suisse is planning to borrow up to £44.5bn from Switzerland’s central bank in a bid to boost its liquidity and calm investors.
Credit Suisse plunged and dragged down other major European lenders in the wake of bank failures in the US.
The lender’s stock dropped about 30 per cent, to about £1.42, before clawing back to a 24 per cent loss at £1.51 at the close of trading on the SIX stock exchange.
At its lowest, the price was down more than 85 per cent from February 2021.“This additional liquidity would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs,” the bank said.
Credit Suisse said the borrowing will be made under the covered loan facility and a short-term liquidity facility, and it will be collateralised by high quality assets.
Bank runs now happen at speed of social media
02:50 , Oliver O’Connell
A bank run conjures images of “It’s a Wonderful Life,” with anxious customers crammed shoulder to shoulder, desperately pleading with a harried George Bailey to hand over their money.
The failure of Silicon Valley Bank last week had the panic but few other similarities, instead taking place on Twitter, message boards, cell phones and bank websites.
What made the failure of Silicon Valley Bank unique compared to past failures of large banks was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise fresh capital; by Friday morning it was insolvent and under government control.
Read more:
Bank runs used to be slow. The digital era sped them up
Why did Silicon Valley Bank collapse?
00:50 , Oliver O’Connell
The collapse of the 16th largest bank in the US sent ripples through global markets on Monday as governments and businesses scrambled to figure out what the impact would be and how it could be contained.
Silicon Valley Bank collapsed on Friday after failing to raise new capital last week.
On Monday, the UK government said that HSBC would take over the UK wing of the bank.
But what was SVB, why did it collapse, and are other banks at risk? We examine these questions here.
Why did Silicon Valley Bank collapse and are other lenders at risk?
Worst one-day performance for London stockmarket since start of Covid pandemic
Wednesday 15 March 2023 22:50 , Oliver O’Connell
Fears that the economy might be on the edge of another “2008-style crisis” caused shares in top European banks to plunge and dragged London’s FTSE 100 down to its lowest level this year.
Troubled bank Credit Suisse saw its share price drop by as much as a quarter to a new record low, causing its shares to be temporarily suspended on the Swiss market.
Investors were shaken by the collapse of Silicon Valley Bank (SVB) in the US over the weekend, sparking concerns about the viability of the “too big to fail” Credit Suisse.
London stock market suffers heavy losses as banking crisis fears intensify
Dow Jones closes 280 points lower, dogged by fears for future of Credit Suisse
Wednesday 15 March 2023 20:50 , Oliver O’Connell
The Dow Jones Industrial Average closed 280 points (0.87%) lower on Wednesday, dogged by concerns over the future of Credit Suisse, which has a large US and international presence beyond its home base in Switzerland.
The S&P ended the day down 0.7% at 3,891.97, and the Nasdaq Composite managed to creep up 0.05% at 11,434 by the close of trading.
At one point the Dow was down 725 points and the S&P briefly saw all of this year’s gains erased.
There was something of a rebound in the afternoon when Swiss regulators announced that the country’s central bank would give Credit Suisse liquidity if needed, helping mitigate earlier concerns when it was reported by Reuters that Saudi National Bank, the institution’s largest investor, said it couldn’t provide further funding.
Credit Suisse had earlier said it had found “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.
Fears over the future of the bank stem from the crisis that emerged in US regional banks following the collapse of Silicon Valley Bank and Signature Bank over the weekend.
Credit Suisse shares sink as key investor vows no more help
Wednesday 15 March 2023 20:30 , Oliver O’Connell
Battered shares of Credit Suisse lost more than one-quarter of their value Wednesday, hitting a record low after its biggest shareholder — the Saudi National Bank — told outlets that it would not inject more money into the ailing Swiss bank.
The turmoil in the Credit Suisse stock price prompted an automatic pause in trading of the bank’s shares on Switzerland’s market and brought down shares of other European banks by as much as double digits. That fanned new fears about the health of financial institutions in the wake of the collapse of Silicon Valley Bank in the United States and worries about midsized lenders.
Credit Suisse stock was down more than 27% at around 1.6 Swiss francs in mid-afternoon trading on the SIX stock exchange Wednesday. That’s down more than 85% from February 2021.
Credit Suisse shares sink as key investor vows no more help
Bank runs now happen at speed of social media
Wednesday 15 March 2023 19:50 , Oliver O’Connell
A bank run conjures images of “It’s a Wonderful Life,” with anxious customers crammed shoulder to shoulder, desperately pleading with a harried George Bailey to hand over their money.
The failure of Silicon Valley Bank last week had the panic but few other similarities, instead taking place on Twitter, message boards, cell phones and bank websites.
What made the failure of Silicon Valley Bank unique compared to past failures of large banks was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise fresh capital; by Friday morning it was insolvent and under government control.
Read more:
Bank runs used to be slow. The digital era sped them up
Lawmaker’s praised for viral video explanation of Silicon Valley Bank’s collapse
Wednesday 15 March 2023 19:20 , Oliver O’Connell
A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.
North Carolina Democrat Jeff Jackson, originally from Chapel Hill, was elected to the US House of Representatives for the state’s 14th District in 2022.
At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.
North Carolina lawmaker’s video explanation of the SVB collapse earns praise online
Schumer: US needs strong, bipartisan legislation on banking
Wednesday 15 March 2023 19:06 , Oliver O’Connell
The United States needs “strong legislation” on banking regulation, Senate Majority Leader Chuck Schumer said on Wednesday, “hopefully” something bipartisan.
Schumer made the comments in response to a question on whether he would support legislation spearheaded by Democratic Senator Elizabeth Warren, which would reinstate banking regulations and oversight rolled back under former President Donald Trump.
He declined to say whether he would support the legislation, insisting that he has faith in President Joe Biden, Treasury Secretary Janet Yellen and the US Federal Reserve.
Reuters
Signature not targeted for crypto activities says New York senator
Wednesday 15 March 2023 18:50 , Oliver O’Connell
New York Senator Kirsten Gillibrand was asked if she had any concerns about whether Signature Bank was targeted and failed by regulators unfairly for its crypto activities.
She said no, adding that the bank appeared to have “had other stability issues”.
Former Rep Barney Frank said on Monday that he believes the state officials behind the action were trying to make an example of Signature Bank.
“This was just a way to tell people, ‘We don’t want you dealing with crypto,’” Frank told The Associated Press in a telephone interview.
Mr Frank is a board member of Signature Bank and was one of the pioneers of the landmark Dodd-Frank Act, which was enacted after the 2008 financial crisis to better insulate the banking system from shocks.
New York’s financial regulator has pushed back on former Rep Frank’s comments, saying its decision to close Signature Bank had “nothing to do with crypto,” citing what it called “a significant crisis of confidence in the bank’s leadership” that occurred over the weekend after regulators shuttered Silicon Valley Bank.
But NYDFS denied his claims in a statement on Tuesday, saying that its decision to close Signature Bank on Sunday and appoint the Federal Deposit Insurance Corp as receiver “was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”
“The decisions made over the weekend had nothing to do with crypto. Signature was a traditional commercial bank with a wide range of activities and customers,” an NYDFS spokesperson said.
“DFS has been facilitating well-regulated crypto activities for several years, and is a national model for regulating the space,” they said.
The spokesperson added that as withdrawal requests ballooned over the weekend, Signature Bank failed to provide reliable and consistent data.
Mr Frank said he was surprised the regulator said the decision to close the bank was not related to cryptocurrency.
“I think that was a factor,” he said in an interview. “I’m puzzled as to why it was closed.”
He added that to his knowledge, bank executives were working to provide data to regulators.
“What we heard from our executives is that the deposit situation had stabilised and they would be getting the capital from the discount window and I continue to be convinced that if we had opened on Monday given the announcements of those two policies, we would have been in a reasonably good shape and certainly functional,” he said.
With reporting from Reuters
Worst one-day performance of London stock market since start of Covid pandemic
Wednesday 15 March 2023 18:35 , Oliver O’Connell
Fears that the economy might be on the edge of another “2008-style crisis” caused shares in top European banks to plunge and dragged London’s FTSE 100 down to its lowest level this year.
Troubled bank Credit Suisse saw its share price drop by as much as a quarter to a new record low, causing its shares to be temporarily suspended on the Swiss market.
Investors were shaken by the collapse of Silicon Valley Bank (SVB) in the US over the weekend, sparking concerns about the viability of the “too big to fail” Credit Suisse.
Anna Wise reports on today’s market activity.
London stock market suffers heavy losses as banking crisis fears intensify
Watch: SenatorJohn Kennedy says fed intervention at SVB was ‘bailout’
Wednesday 15 March 2023 18:10 , Oliver O’Connell
“You can put perfume on a pig, but it still smells like a pig.”
Gallego takes aim at Sinema over 2018 bank deregulation vote
Wednesday 15 March 2023 17:45 , Oliver O’Connell
Democratic Rep Ruben Gallego slammed independent Sen. Kyrsten Sinema of Arizona on Tuesday for backing a bank deregulation bill he says contributed to the collapse of Silicon Valley Bank, highlighting Sinema’s Wall Street ties as he campaigns for her seat.
The contrast over the 2018 legislation feeds Gallego’s push to portray Sinema as a friend of powerful interests, a central theme of the Senate campaign he launched in January.
“It’s not like we received different information. We got the same pitches as all the members of Congress,” Gallego told reporters outside Silicon Valley Bank’s offices in Tempe. “But when push came to shove, and the vote came to the floor, I voted to protect Arizona and she voted to protect Wall Street.”
Gallego slams Sinema over 2018 bank deregulation vote
Treasury officials reviewing US exposure to Credit Suisse, report says
Wednesday 15 March 2023 17:30 , Oliver O’Connell
The US Treasury is monitoring the situation surrounding Credit Suisse and is in touch with global counterparts about it, a Treasury spokesperson said on Wednesday as the bank came under renewed market pressures after a major shareholder ruled out providing new capital.
Asked about Treasury’s involvement in the Credit Suisse matter, a Treasury spokesperson said in an emailed statement: “Treasury is monitoring this situation and has been in touch with global counterparts.”
Reuters
Ayanna Pressley adds voice to Warren and Porter’s call for reversal of bank regulation rollback
Wednesday 15 March 2023 17:15 , Oliver O’Connell
Congresswoman Ayanna Pressley has added her voice to growing calls for a reversal of 2018 Republican-led legislation that rolled back regulations put in place after the 2008 global financial crisis.
Rep Pressley applauds the efforts of Senator Elizabeth Warren and Rep Katie Porter in presenting a bill to do just that.
How the 2008 global financial crisis still fuels today’s populist politics
Wednesday 15 March 2023 16:45 , Oliver O’Connell
Mike Pence and Bernie Sanders are hardly political allies.
But in the aftermath of two large bank failures, the conservative former vice president and the democratic socialist senator are striking remarkably similar tones. Pence, a Republican, bemoaned that “we live in a world where certain politically favored businesses are propped up, backstopped and bailed out by government.” Sanders, an independent who caucuses with Democrats, said “we cannot continue down the road of more socialism for the rich and rugged individualism for everyone else.”
Their sentiment reflects the populism that has coursed through both political parties in the 15 years since shaky financial institutions last spurred anxiety about the broader economy. The 2008 financial crisis unleashed a political realignment that rejected perceived elites and establishment figures, often with unpredictable results for Democrats and Republicans alike.
Read more:
How the last banking tumult fuels today’s populist politics
Dow down 660pts at lunchtime in New York
Wednesday 15 March 2023 16:30 , Oliver O’Connell
Stocks on Wall Street have fallen so far on Wednesday amid newly strengthened concerns about the financial sector as shares of Credit Suisse, which had a large US operation, fell by more than 15 per cent.
The Dow Jones Industrial Average dropped 644 points, or 1.6%. The Nasdaq Composite lost 1.1%, while the S&P 500 fell 1.8%.
The crisis in the financial sector began with US regional banks after Silicon Valley Bank and Signature Bank collapsed due to poor management decisions as the Federal Reserve continued to hike interest rates to counter inflation.
Credit Suisse was fingered as a larger possible casualty on Monday due to internal weaknesses and shares of the troubled bank fell to an all-time low.
Saudi National Bank, the bank’s largest investor, said on Wednesday it could not provide any more funding, according to a Reuters report.
Earlier this week, Credit Suisse said itt had found “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.
As Credit Suisse dragged down the banking sector in European Bank sector, so followed big US banks — Citi was down 6 per cent, Goldman Sachs 5.5 per cent, Wells Fargo 5 per cent, and Bank of America 2.5 per cent.
After a rebound on Tuesday, regional US banks also fell back in trading on Wednesday.
Elizabeth Warren laughs at concept of banks doing their own testing
Wednesday 15 March 2023 16:15 , Oliver O’Connell
Senator Elizabeth Warren laughed out loud at the concept of banks being qualified to do their own stress testing during an appearance on CNBC this morning.
Host Sara Eisen asked about the legislation Senator Warren is sponsoring to undo the Trump administration’s roll back of bank regulations put in place after the 2008 global financial crisis.
“We’ve had a number of those CEOs on the shows in the last few days, Fifth Third, Schwab, they do their own stress testing,” said Eisen to laughter from the senator.
“I’m sorry,” Ms Warren said. “I taught school for many, many years and I did not let my students do their own testing.”
She continued: “The testing that is meaningful is the testing that comes from the outside. And it’s also the testing where you don’t give the answers in advance,” she continued. “The whole point of stress testing is for someone on the outside of the bank to say, hmm, what could go wrong here and to make sure that the bank could withstand those kinds of problems like a sudden increase in interest rates.”
“And for these banks to say not to worry, we’re testing ourselves is truly laughable,” the senator concluded.
Watch:
What happened to Credit Suisse today?
Wednesday 15 March 2023 15:50 , Oliver O’Connell
Credit Suisse shares slumped by as much as 30% on Wednesday after its largest shareholder said it could not provide further support, prompting the Swiss bank’s CEO to make new assurances on its financial strength.
Saudi National Bank (SNB), which holds 9.88 per cent of Credit Suisse, said it would not buy more shares on regulatory grounds.
Shares in Credit Suisse, which is battling to recover from a string of scandals that have undermined the confidence of investors and clients, were down about 17 per cent in early afternoon trading, after shedding as much as 30p per cent to a new record low.
In a sign that regulatory authorities are tracking developments, European Central Bank (ECB) officials contacted lenders it supervises to ask about financial exposures to Credit Suisse, a source familiar with the matter told Reuters, confirming a Wall Street Journal report.
Meanwhile, the falls in Credit Suisse’s market value also prompted action among politicians with French Prime Minister Elisabeth Borne saying that Finance Minister Bruno Le Maire would speak with his Swiss counterpart in the coming hours.
“The Credit Suisse situation is for the Swiss authorities to deal with,” Borne said in the French Senate.
Credit Suisse CEO Ulrich Koerner moved to calm nerves, saying the bank’s liquidity base remained strong and was well above all regulatory requirements. Koerner had said earlier in the week Credit Suisse’s liquidity coverage ratio averaged 150 per cent in the first quarter of this year.
The Swiss National Bank declined to comment on the fall in shares Credit Suisse shares.
Credit Suisse on Tuesday published its annual report for 2022, which said it had identified “material weaknesses” in controls over financial reporting and had not yet stemmed customer outflow.
Switzerland’s second-biggest bank had seen fourth-quarter customer outflows rise to more than 110 billion Swiss francs ($120bn).
Exane analysts said they saw a bailout by the Swiss National Bank and financial regulator Finma, possibly with one or more other banks, as the “most likely scenario” facing Credit Suisse.
They also raised the possibility of a u-turn by Saudi National Bank, which upped its stake in Credit Suisse last year as part of a capital raise to bolster its financial strength.
“We cannot because we would go above 10 per cent. It’s a regulatory issue,” SNB Chairman Ammar Al Khudairy told Reuters on Wednesday.
Reuters
How Washington came to the rescue of US banks
Wednesday 15 March 2023 15:20 , Oliver O’Connell
After the sudden collapse of Silicon Valley Bank, California Democratic Rep. Maxine Waters started furiously working the phones to find out what was going on with the failed lender — and what would happen to its panicked depositors.
Waters, former chair of the House Financial Services Committee, had her doubts that another bank would step up as a savior and buy the defunct institution.
“Banks don’t just wake up and say: ‘Oh, there’s a problem with another significant bank and they’ve collapsed. Let’s just take it over,’’’ she said.
So began a frenetic weekend of nonstop briefings with regulators, lawmakers, administration officials and President Joe Biden himself about how to handle the demise of the nation’s 16th-biggest bank and a go-to financial institution for tech entrepreneurs. At the core of the problem was tens of billions of dollars — including money companies needed to meet payrolls — sitting in Silicon Valley Bank accounts that were not protected by federal deposit insurance that only goes up to $250,000.
Something needed to be done, federal officials agreed, before Asian stock markets opened Sunday evening and other banks faced the potential for waves of panicked withdrawals Monday morning.
Washington reacts on the fly to Silicon Valley Bank failure
Warren and Blumenthal push for SVB executives probe
Wednesday 15 March 2023 14:50 , Oliver O’Connell
Senators Elizabeth Warren and Richard Blumenthal have written to the Securities Exchange Commission and the Department of Justice pressing for an investigation into whether Silicon Valley Bank executives broke the law.
Why did Silicon Valley Bank collapse and are other lenders at risk?
Wednesday 15 March 2023 14:30 , Rachel Sharp
The collapse of the 16th largest bank in the US sent ripples through global markets on Monday as governments and businesses scrambled to figure out what the impact would be and how it could be contained.
Silicon Valley Bank collapsed on Friday after failing to raise new capital last week.
But what was SVB, why did it collapse, and are other banks at risk? We examine these questions here:
Why did Silicon Valley Bank collapse and are other lenders at risk?
Democratic Rep Gallego slams Kyrsten Sinema over deregulation vote
Wednesday 15 March 2023 14:00 , Rachel Sharp
Democratic Rep. Ruben Gallego slammed independent Sen. Kyrsten Sinema of Arizona on Tuesday for backing a bank deregulation bill he says contributed to the collapse of Silicon Valley Bank, highlighting Sinema’s Wall Street ties as he campaigns for her seat.
The contrast over the 2018 legislation feeds Gallego’s push to portray Sinema as a friend of powerful interests, a central theme of the Senate campaign he launched in January.
“It’s not like we received different information. We got the same pitches as all the members of Congress,” Gallego told reporters outside Silicon Valley Bank’s offices in Tempe. “But when push came to shove, and the vote came to the floor, I voted to protect Arizona and she voted to protect Wall Street.”
A spokesperson for Sinema, Hannah Hurley, said the senator is not focused on the election and declined to respond to Gallego’s comments.
Sinema on Sunday applauded the Biden administration’s announcement that people who deposited money at the bank would have prompt access to it.
“The federal government must now ensure those responsible are held accountable, while maintaining stability for all Americans who rely on our banking system,” she said in a statement.
How much the regulatory rollback contributed to the Silicon Valley Bank failure is a matter of debate. The Federal Reserve announced Monday it will review its supervision of the bank to understand how it might have better managed its regulation. The Federal Reserve has faced stringent criticism for missing signs the bank was at risk.
Silicon Valley Bank doesn’t have branches in Arizona but has hundreds of employees working from a lakefront office in a Phoenix suburb.
Gallego said he supports the Biden administration’s intervention to protect bank customers, adding, “This could have really spiraled out of control.” He said the banking system needs new safeguards for the modern world, where fears can spread quickly through social media and people can respond instantly by moving their money electronically.
A Gallego spokesperson said he will co-sponsor legislation to repeal the 2018 rollback, which was introduced Tuesday by Sen. Elizabeth Warren, D-Mass., and Rep. Katie Porter, D-Calif.
Sinema left the Democratic Party last year after frequently bucking the party and the White House. She has not said whether she will run for reelection in a three-way contest against a Democrat and Republican in one of the most closely watched 2024 Senate races.
Sinema was one of 50 Democrats who voted for the 2018 legislation rolling back provisions of the Dodd-Frank financial regulation measure, which President Barack Obama signed in 2010 in response to the financial crisis that spawned the Great Recession. Gallego voted against it.
The Associated Press contributed to this report
Citadel founder says US shouldn’t bail out depositors
Wednesday 15 March 2023 13:30 , Rachel Sharp
The founder of Citadel hedge fund has said that the US shouldn’t guarantee the deposits for customers at Silicon Valley Bank and Signature Bank after the two institutions failed.
Ken Griffin told the Financial Times that if the Biden administration refused to bail out customers it would be a “great lesson in moral hazard”.
“There’s been a loss of financial discipline with the government bailing out depositors in full,” he said.
“The US is supposed to be a capitalist economy, and that’s breaking down before our eyes.
“Losses to depositors would have been immaterial, and it would have driven home the point that risk management is essential.”
He added: “We’re at full employment, credit losses have been minimal, and bank balance sheets are at their strongest ever. We can address the issue of moral hazard from a position of strength.”
His comments came before it emerged that Citadel had bought a 5.3 percent stake in Western Alliance.
On Sunday, the Biden administration promised to protect depositors at the two failed banks, in a move that appears to have helped reduce market concerns.
Breaking: UK will avoid recession in 2023, chancellor says
Wednesday 15 March 2023 13:00 , Rachel Sharp
The UK will not enter a “technical recession” this year, the UK’s chancellor Jeremy Hunt told the Commons.
Starting his Budget, Mr Hunt said the British economy is “proving the doubters wrong” in the face of “enormous challenges.”
He added that the UK economy is “on the right track.”
The chancellor said: “We remain vigilant, and will not hesitate to take whatever steps are necessary for economic stability. Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.
“They forecast we will meet the prime minister’s priorities to halve inflation, reduce debt and get the economy growing. We are following the plan and the plan is working. But that’s not all we’ve done.”
Read the story here:
UK will avoid recession in 2023, chancellor says
Signature Bank was under criminal investigation when New York regulators seized it
Wednesday 15 March 2023 12:30 , Rachel Sharp
Signature Bank was the focus of a criminal investigation when New York regulators seized it over the weekend, it has been revealed.
Sources told Bloomberg that Justice Department investigators in Washington and Manhattan were investigating the bank over whether it had taken appropriate steps to detect possible money laundering operations.
The Securities and Exchange Commission (SEC) was also investigating the matter, the sources said.
New York regulators shuttered the bank – which predominantly serves crypto clients – on Sunday, making it the second US bank to shutter in just three days.
Democrats vow to give SVB donations back
Wednesday 15 March 2023 12:00 , Rachel Sharp
Several Democrats are vowing to hand back donations they received from Silicon Valley Bank’s former CEO Greg Becker and its political action committee (PAC) in the wake of the bank’s sudden collapse.
A source told CNBC Senate Majority Leader Chuck Schumer has vowed to give the funds to charity.
Mr Schumer received a $5,800 donation from Mr Becker to his campaign in June 2021 and a $2,700 donation from its PAC in 2016, records show.
Meanwhile, Rep Maxine Waters said she will hand back the $2,500 donation she was given by the bank’s PAC, reported Politico.
Bitcoin price resurgence revives ‘digital gold’ comparisons
Wednesday 15 March 2023 11:30 , Rachel Sharp
Bitcoin’s recent price revival has once again bolstered the cryptocurrency’s reputation as a form of “digital gold” among some analysts, who claim it serves as a safe-haven asset during times of geopolitical and economic crisis.
The world’s leading cryptocurrency is up more than 10 per cent over the last week, despite turmoil among the banking and tech sector.
Bitcoin’s price trajectory actually mirrored that of gold’s during the collapse of Silicon Valley Bank (SVB) earlier this week, having previously followed a similar path to stocks.
Read the full story:
Bitcoin price resurgence revives ‘digital gold’ comparisons
Credit Suisse stocks plunge to new record low
Wednesday 15 March 2023 11:10 , Rachel Sharp
Credit Suisse stocks plunged to a new record low, dropping by more than 21 percent on Wednesday morning as the fallout from the collapse of Silicon Valley Bank (SVB) continues.
Shares in the struggling Swiss bank plummeted for a second consecutive day after its top shareholder Saudi National Bank said it would not provide any further financial assistance.
“We cannot because we would go above 10 percent. It’s a regulatory issue,” Saudi National Bank Chairman Ammar Al Khudairy told Reuters on Wednesday.
Concerns are mounting that the Swiss bank could be the next to collapse after it revealed it had found “material weaknesses” in its financial report on Tuesday.
Wall Street expert Robert Kiyosaki, famed for predicting the Lehman Brothers’ failure, has pegged Credit Suisse as the next major bank most likely to collapse.
New Silicon Valley Bank CEO brings experience and ‘humility’
Wednesday 15 March 2023 10:00 , Oliver O’Connell
In a message to clients, newly appointed Silicon Valley Bank CEO Tim Mayopoulos says: “I look forward to getting to know the clients of Silicon Valley Bank. I come to this role with humility. I also come to this role with experience in these kinds of situations.”
He explains: “I was part of the new leadership team that joined Fannie Mae in the wake of the financial crisis in 2008-09, and I served as the CEO of Fannie Mae from 2012-18. I am very proud of work we did there to restore the company to profitability and to stabilize the housing finance system in a period of unprecedented challenge.”
Mr Mayopoulos adds: “I also come with experience in and an appreciation for the innovation economy. Until recently, I was the president of a Silicon Valley-based software company that provides technology to financial institutions to serve their consumer banking customers. I know how important Silicon Valley Bank has been and continues to be to the success of its clients and the innovation ecosystem.”
Tough decisions ahead as Fed criticised for missing red flags before bank failure
Wednesday 15 March 2023 09:30 , Oliver O’Connell
The Federal Reserve is facing stinging criticism for missing what observers say were clear signs that Silicon Valley Bank was at high risk of collapsing into the second-largest bank failure in U.S. history.
The Fed was the primary federal supervisor of the bank based in Santa Clara, California, that failed last week. The bank was also overseen by the California Department of Financial Protection and Innovation.
Critics point to many red flags surrounding Silicon Valley Bank, including its rapid growth since the pandemic, its unusually high level of uninsured deposits and its many investments in long-term government bonds and mortgage-backed securities, which tumbled in value as interest rates rose.
Read more:
Fed, under criticism for bank failure, faces tough decisions
Premium: Has enough been done to calm Wall Street over the banking crisis?
Wednesday 15 March 2023 09:00 , Oliver O’Connell
James Moore, The Independent’s chief business commentator, writes:
Just what we needed right now: another banking crisis. But after the bloodbath at the beginning of the week, a rally quickly got underway. Regional banks in the United States – in real danger of experiencing a run on their deposits while larger rivals benefit from inflows – found some support.
Has enough been done to calm Wall Street over the banking crisis?
Private equity firms interested in SVB loan book, reports say
Wednesday 15 March 2023 08:30 , Oliver O’Connell
CNBC reports that private equity firms Apollo Global Management and KKR are among the institutions reviewing a book of loans held by Silicon Valley Bank. The network cites people familiar with the discussions who requested anonymity.
Two of the sources said Apollo may be interested in acquiring a piece of the business but it is unclear if the FDIC would prefer a single buyer for the whole bank.
Bloomberg earlier reported a number of private equity firms were interested in the bank’s loan portfolio, including Ares Management, Blackstone, and Carlyle Group, in addition to Apollo and KKR.
New Silicon Valley Bank CEO: ‘We are open for business’
Wednesday 15 March 2023 08:00 , Oliver O’Connell
Tim Mayopoulos, the new CEO of Silicon Valley Bank — now technically known as Silicon Valley Bridge Bank — has declared the bank is open for business.
In a message posted to the company’s website and emailed to customers, Mr Mayopoulos said: “We are doing everything we can to rebuild, win back your confidence, and continue supporting the innovation economy. We recognise the past few days have been an extremely challenging time, and we are grateful for your patience.”
He continued: “We are open for business and are hard at work bringing all systems and solutions back online to support you. We are making new loans and fully honoring existing credit facilities.
“The number one thing you can do to support the future of this institution is to help us rebuild our deposit base, both by leaving deposits with Silicon Valley Bridge Bank and transferring back deposits that left over the last several days.”
Underlining the announcement yesterday that depositors have full access to their money, and that both new and existing deposits are fully protected by the FDIC, he characterised the bank as now among the safest in the country thanks to the actions of regulators.
The bank is actively opening new accounts of all sizes and making new loans, Mr Mayopoulos added.
Lawmaker’s explanation of Silicon Valley Bank’s collapse goes viral
Wednesday 15 March 2023 07:30 , Oliver O’Connell
A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.
North Carolina Democrat Jeff Jackson, originally from Chapel Hill, was elected to the US House of Representatives for the state’s 14th District in 2022.
At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.
Read more:
North Carolina lawmaker’s video explanation of the SVB collapse earns praise online
Are we in the clear yet? Not according to some experts
Wednesday 15 March 2023 07:15 , Oliver O’Connell
A Wall Street expert has revealed which bank he believes will fail next, following the Silicon Valley Bank (SVB) collapse.
SVB folded on Friday after failing to raise new capital after it sold government bonds at heavy losses to reimburse customers withdrawing their cash.
Now Robert Kiyosaki, who accurately predicted the 2008 Lehman Brothers’ collapse, warned that Credit Suisse could be at risk as the volatile bond market crashes, with rising interest causing bonds to fall in price.
Kate Plummer has the story.
Wall Street expert predicts next major bank to fold
Class action suit filed against Silicon Valley Bank parent
Wednesday 15 March 2023 06:45 , Oliver O’Connell
A class action lawsuit is being filed against the parent company of Silicon Valley Bank, its CEO and its chief financial officer, saying that company didn’t disclose the risks that future interest rate increases would have on its business.
The lawsuit against SVB Financial Group, CEO Greg Becker and CFO Daniel Beck was filed in the US district court for the Northern district of California. It is looking for unspecified damages to be awarded to those who invested in SVB between June 16, 2021 and March 10, 2023.
The lawsuit from shareholders led by Chandra Vanipenta says some quarterly and annual financial reports from SVB didn’t fully account for warnings from the Federal Reserve about interest rate hikes.
Class action suit filed against Silicon Valley Bank parent
After blame laid on Trump administration, Pence deflects to Biden for Silicon Valley Bank collapse
Wednesday 15 March 2023 06:15 , Oliver O’Connell
Former Vice President Mike Pence has joined the choir of conservative voices trying to pin the Silicon Valley Bank collapse on Democrats while Democrats try to do the same to them.
In an editorial for The Daily Mail, Mr Pence takes aim at Joe Biden and the Democrats, claiming that “just like 2008,” the party has “increased spending by over $10 trillion” that “fueled record inflation, inevitably requiring the FED to raise interest rates.”
He laid some of the blame on the bank, which collapsed on Friday, and laced his criticisms with conservative media buzzwords.
Graig Graziosi reports on what the former vice president said.
Pence: Biden to blame for SVB collapse
‘Woke banks’ become Republican scapegoat for SVB collapse
Wednesday 15 March 2023 05:45 , Oliver O’Connell
For months, right-wing media figures and Republican elected officials have blamed a “woke” agenda for what they perceive is the collapse of American institutions, from its schools and workplaces to the banks that facilitate their businesses.
The historic failure of Silicon Valley Bank is likely the result of a host of compounded factors that have nothing to do with so-called “wokeness,” from Donald Trump-era cuts to regulations that were put in place during the last financial crisis to the bank’s untenable concentration in an explosion of venture capital firms and tech startups as it careened into reality, rising interest rates and panic.
Alex Woodward reports.
Republicans blame ‘wokeness’ for Silicon Valley Bank’s collapse
Demise of SVB disrupts the disruptors in tech
Wednesday 15 March 2023 04:45 , Oliver O’Connell
Silicon Valley Bank’s collapse rattled the technology industry that had been the bank’s backbone, leaving shell-shocked entrepreneurs thankful for the government reprieve that saved their money while they mourned the loss of a place that served as a chummy club of innovation.
Silicon Valley Bank’s demise disrupts the disruptors in tech
BUT New York regulator says Signature Bank closure ‘nothing to do with crypto’
Wednesday 15 March 2023 03:15 , Oliver O’Connell
New York’s financial regulator has pushed back on former Rep Barney Frank’s comments, saying its decision to close Signature Bank had “nothing to do with crypto,” citing what it called “a significant crisis of confidence in the bank’s leadership” that occurred over the weekend after regulators shuttered Silicon Valley Bank.
Mr Frank is a board member of Signature Bank and was one of the pioneers of the landmark Dodd-Frank Act, which was enacted after the 2008 financial crisis to better insulate the banking system from shocks.
“I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” Mr Frank told CNBC on Monday. “We became the poster boy because there was no insolvency based on the fundamentals.”
But NYDFS denied his claims in a statement on Tuesday, saying that its decision to close Signature Bank on Sunday and appoint the Federal Deposit Insurance Corp as receiver “was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”
“The decisions made over the weekend had nothing to do with crypto. Signature was a traditional commercial bank with a wide range of activities and customers,” an NYDFS spokesperson said.
“DFS has been facilitating well-regulated crypto activities for several years, and is a national model for regulating the space,” they said.
The spokesperson added that as withdrawal requests ballooned over the weekend, Signature Bank failed to provide reliable and consistent data.
Mr Frank said he was surprised the regulator said the decision to close the bank was not related to cryptocurrency.
“I think that was a factor,” he said in an interview. “I’m puzzled as to why it was closed.”
He added that to his knowledge, bank executives were working to provide data to regulators.
“What we heard from our executives is that the deposit situation had stabilised and they would be getting the capital from the discount window and I continue to be convinced that if we had opened on Monday given the announcements of those two policies, we would have been in a reasonably good shape and certainly functional,” he said.
Signature was a commercial bank with private client offices with nine national business lines including commercial real estate and digital asset banking.
With reporting from Reuters
Barney Frank claims Signature Bank seized to send banks a message
Wednesday 15 March 2023 02:45 , Oliver O’Connell
A regulatory takeover of a New York-based bank was intended to send a message to U.S. banks to stay away from the cryptocurrency business, a former member of Congress who was on the bank’s board says.
Former US Rep. Barney Frank said Monday that he believes the state officials behind the action were trying to make an example of Signature Bank.
“This was just a way to tell people, ‘We don’t want you dealing with crypto,’” Frank told The Associated Press in a telephone interview.
Signature Bank seized to send banks a message, director says
Voices: Ghosts of the 2008 financial crisis loom over Biden’s response
Wednesday 15 March 2023 01:15 , Oliver O’Connell
Eric Garcia writes:
When President Joe Biden announced on Monday that people who had deposited their money in the now-unraveled Silicon Valley Bank would have their money available, he emphasised that American taxpayers would not be left on the hook.
Similarly, he added that the people responsible at the bank would need to be fired and that investors in Silicon Valley Bank would not be made whole, arguing that they took a risk and now have to suffer the losses.
Ghosts of the 2008 financial crisis loom over Biden’s response to Silicon Valley Bank
DOJ and SEC to probe stock sales ahead of Silicon Valley Bank collapse, report says
Wednesday 15 March 2023 00:15 , Oliver O’Connell
The US Department of Justice and the Securities and Exchange Commission are investigating the collapse of Silicon Valley Bank, The Wall Street Journal reports, citing people familiar with the matter.
The tech and start-up-focused lender based in Santa Clara, California, was taken over by regulators on Friday during a run on its deposits, making it the second-largest bank failure in US history.
It is not unusual for there to be such investigations when large financial institutions or public companies collapse or suffer unexpected losses, but the separate probes will also look at stock sales that company bosses made days before the bank failed.
SVB: Justice Department and SEC to probe stock sales ahead of collapse
Lawmaker’s explanation of Silicon Valley Bank’s collapse goes viral
Tuesday 14 March 2023 23:45 , Oliver O’Connell
A congressman has been widely praised for posting a two-and-a-half-minute video to Twitter and TikTok clearly laying out the Silicon Valley Bank situation.
North Carolina Democrat Jeff Jackson, originally from Chapel Hill, was elected to the US House of Representatives for the state’s 14th District in 2022.
At 2am on Monday morning, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.
Read more:
North Carolina lawmaker’s video explanation of the SVB collapse earns praise online
Voices: The Silicon Valley Bank collapse has made three things horrifically clear
Tuesday 14 March 2023 23:15 , Oliver O’Connell
It was no Lehman Brothers moment, but there are three hard lessons to be learned from the past few days, writes David Callaway.
The Silicon Valley Bank collapse has made three things horrifically clear
Biden says banking system is ‘safe’ and vows accountability for executives
Tuesday 14 March 2023 22:45 , Oliver O’Connell
President Joe Biden reassured Americans that the nation’s banking system is safe after Silicon Valley Bank collapsed last week and said there would be accountability for financial executives.
The president’s actions come after the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation announced on Sunday evening that depositors for Silicon Valley Bank would have access to their money.
Eric Garcia filed this report from Washington, DC, on Monday.
Biden says banking system is ‘safe’ after Silicon Valley Bank collapse
Tuesday 14 March 2023 22:15 , Oliver O’Connell
Jeremy Hunt hails ‘great resilience’ as HSBC rescues Silicon Valley Bank UK branch
Recap: Why did Silicon Valley Bank collapse?
Tuesday 14 March 2023 21:45 , Oliver O’Connell
The collapse of the 16th largest bank in the US sent ripples through global markets on Monday as governments and businesses scrambled to figure out what the impact would be and how it could be contained.
Silicon Valley Bank collapsed on Friday after failing to raise new capital last week.
On Monday, the UK government said that HSBC would take over the UK wing of the bank.
But what was SVB, why did it collapse, and are other banks at risk? We examine these questions here.
Why did Silicon Valley Bank collapse and are other lenders at risk?
Top GOP Senate Finance member: No new banking rules needed
Tuesday 14 March 2023 21:25 , Oliver O’Connell
Senator Mike Crapo, the top Republican on the Senate Finance Committee told CNN’s Manu Raju that no new banking rules were needed following the collapse of Silicon Valley Bank, arguing the system is in place, but better supervision is needed.
Mr Crapo was the author of the 2018 bill that led to the rollback of the Dodd-Frank regulations put in place after the 2008 global financial crisis.
“The regulatory system is in place. The regulatory authorities that Congress has given to the Fed and the FDIC are completely adequate for the system to work,” he said.
“We simply need to have better supervision, and probably, like I said, a little tuning up of how the regulatory stress testing works with regard to liquidity issues in the banks right now.”
Watering down financial regulations sees Trump blamed for Silicon Valley Bank collapse
Tuesday 14 March 2023 21:15 , Oliver O’Connell
Critics looking to assign blame for the collapse of Silicon Valley Bank have found possible culprits in Donald Trump and Republican senators.
Though little known outside of Silicon Valley, the SVB was the leading lender to tech firms and startups before it crumbled on Friday.
Graig Graziosi reports.
Trump blamed over Silicon Valley Bank collapse for cutting down financial regulations