Banks’ lifelines ease fears of global financial crisis | – #Banks #lifelines #ease #fears #global #financial #crisis
March 17 (Reuters) – Troubled USA and Europe So much for banks billion dollar lifelines boosted investor confidence on Friday and buoyed sentiment in subdued stocks, although concerns now center on whether the global financial crisis has been fully averted.
USAof the major banks on Thursday First Republic Bank-a (FRC.N) 30 billion dollars They deposited and last week USAThey stepped in to rescue the lender, which was caught in a widening crisis caused by the bankruptcy of other mid-sized lenders.
Package 54 to boost liquidity of Swiss bank Credit Suisse ( CSGN.S ). billion urgent to dollar central bank It came a day after taking the loan and it’s global bank helped calm panic over the crisis.
On Friday, Asian shares were mostly higher in morning trade, following a relief rally on Wall Street. First Republic Bank shares on bailout news 10% rose, but shares fell 18% in after-market trading after the bank said it would suspend its dividend. Shares are down more than 70% since March 6.
Karen Jorritsma, head of Australian equities at RBC Capital Markets, said: “I don’t think we’re at the peak of a global financial crisis, balance sheets 20It’s much better than in 2008, the banks are better regulated,” he said. “But people are concerned that the risk of contagion is real and undermines trust.”
Europe The central bank pushed ahead with a 50-basis-point interest rate hike on Thursday, arguing that despite turmoil in financial markets, euro zone banks are resilient and that, if anything, the move to higher interest rates should boost their margins.
Attention now turns to the Federal Reserve’s policy decision next week and whether it will stick with aggressive rate hikes as it tries to get inflation under control.
In Asia, authorities in Singapore and Australia said they were watching financial markets but were confident local banks were well capitalized and could withstand major shocks.
Bank stocks globally were rocked after Silicon Valley Bank collapsed last week due to losses on bonds that piled up as interest rates rose, raising questions about what else might be lurking in the broader banking system.
Within days, market turmoil trapped Credit Suisse, forcing it to borrow money from the Swiss central bank.
The spotlight returned to the US on Thursday as major banks scrambled to shore up support for regional lender First Republic, whose shares have tumbled 70% over the past nine trading sessions.
The stock exchange of the First Republic Bank collapsed
The largest U.S. banks including JPMorgan Chase & Co ( JPM.N ), Citigroup Inc ( CN ), Bank of America Corp ( BAC.N ), Wells Fargo & Co ( WFC.N ), Goldman Sachs ( GS.N some of the bank names ) and Morgan Stanley ( MS.N ) were involved in the bailout, according to a statement from the banks.
The deal was crafted by senior brokers including US Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and JPMorgan Chase CEO Jamie Dimon, who negotiated the package together on Tuesday, a source familiar with the situation said.
EXCEPTIONAL LIQUIDITY
Credit Suisse, 20It became the first global bank to go into emergency since the 2008 financial crisis, as fears of contagion gripped the banking sector and raised doubts that central banks could not continue aggressive interest rate hikes to curb inflation.
Rapidly rising interest rates have made it harder for some businesses to repay or service loans, increasing the chances of losses for lenders already worried about the recession.
Politicians have tried to emphasize that the current turmoil is different from the global financial crisis of 15 years ago because banks are better capitalized and funds are more readily available.
But data on Thursday also showed that banks in the United States asked the central bank for a record amount of emergency liquidity in recent days, boosting the size of the Fed’s balance sheet after months of contraction.
U.S. Treasury Secretary Yellen said the country’s banking system remains healthy thanks to “decisive and strong” steps after the collapse of Silicon Valley Bank.
Credit Suisse shares rallied 19% on Thursday, reversing Wednesday’s 25% decline. According to Refinitiv data, since March 8 Europe Banks market value of approximately 165 billion dollars lost
By Reuters Graphics Reuters Graphics Pete Schroeder and Chris Prentice in Washington, Nupur Anand in New York, Tom Westbrook and Rae Wee in Singapore, Scott Murdoch in Sydney, Noel Randewich in Oakland, California; Written by Deepa Babington and Sam Holmes; Edited by Sonali Paul
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Scott Murdoch
2023-03-17 06:43:18
Source – reuters
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