Fed, US banks in focus as sentiment improves on Credit Suisse bailout | – #Fed #banks #focus #sentiment #improves #Credit #Suisse #bailout
March 21 (Reuters) – Investors took some heart on Tuesday from the rescue of troubled lender Credit Suisse by Swiss rival UBS ( UBSG.S ), although shockwaves credit markets and smaller USA concerns about further damage to banks continue.
Attention now USA Ahead of the Federal Reserve’s meeting this week, traders are wondering whether the central bank’s brutal rate hikes, blamed by some for causing the crisis, may end.
3 billion Swiss franc (3.2 billion dollars) was once 90 for Credit Suisse billion The largest dollar-denominated name in the mix was drafted by Swiss regulators and announced on Sunday.
Asian stocks lifted off their lows as the move calmed the worst fears of systemic contagion in the financial system.
Grace Tam, Senior Investment Advisor Hong Kong at BNP Paribas Wealth Management, said, “USA“The current situation at regional banks and Credit Suisse has raised concerns about the risk of contagion,” he said. “This time, the main central banks reacted very quickly to stop the liquidity. US officials also bank If the crisis expands, all bank they are exploring ways to temporarily guarantee their deposits.”
However, he expected near-term investor sentiment to remain volatile.
In a sign of business continuity, Credit Suisse kicked off its three-day annual Asia Investment Conference in Hong Kong on Tuesday, attended by senior executives from regional companies and others.
Credit Suisse CEO Ulrich Koerner, who was expected to attend the conference, left the conference and the event was closed to the media after the weekend rescue effort.
The collapse of Credit Suisse US mid-sized lenders Silicon Valley Bank and prompted by the failure of Signature Bank and Europe Although the bank’s shares (.SX7P) rebounded from recent losses, investors were still worried about other ticking bombs in the banking system.
Shares of First Republic Bank ( FRC.N ) fell by half on Monday on concerns that a $30 billion inflow of capital last week would not be enough.
JPMorgan Chase & Co ( JPM.N ) CEO Jamie Dimon is leading talks with other big banks about a new effort to stabilize First Republic with a possible investment in the lender, the Wall Street Journal reported, citing people familiar with the matter. news gives
JPMorgan and First Republic declined to comment on the report. A spokeswoman for First Republic pointed to an earlier statement in which it said the bank was “well positioned to manage short-term deposit activity.”
Wall Street’s S&P 500 banks index ( .SPXBK ) recovered 0.6%, while other regional U.S. lenders rose. PacWest Bancorp ( PACW.O ) jumped almost 11% after it said deposit flows had stabilized and its available cash exceeded total uninsured deposits.
Market value of US regional banks included in the S&P 500 regional bank index
Policymakers from Washington to Europe have repeatedly stressed that the current turmoil is different from the global financial crisis 15 years ago, pointing to better capitalized banks and easier access to funds.
Still, top central banks have stepped up efforts to stabilize the financial system in a bid to prevent bank runs from escalating into a bigger crisis over the weekend. dollars they promised to provide liquidity.
In a global response not seen since the height of the pandemic, the Fed said it was joining central banks in Canada, Britain, Japan, the euro zone and Switzerland in a coordinated move to boost market liquidity.
Traders now increased their bets that the Fed will end its hiking cycle on Wednesday to ensure financial stability, but overall consensus remains on whether the Fed will raise its benchmark policy rate.
“The banking sector’s near-death experience over the past two weeks will force Fed officials to be more measured in their stance on the pace of hikes,” said Steve Englander, head of G10 FX research at Standard Chartered.
Investors in Europe are focused on a massive hit to some Credit Suisse bondholders, which could mean the euro zone and the Great Britain prompted bank supervisors to try to stem the failure in the convertible bank bond market.
Unlike Credit Suisse, whose primary regulator is in Switzerland, regulators said holders of this type of debt would only suffer after their shareholders were wiped out.
Law firm Quinn Emanuel Urquhart & Sullivan said Monday that lawyers are talking to a number of AT1 bondholders about possible legal action.
Reuters graphics
The deal will make UBS Switzerland’s only global bank. It would also make the Swiss economy more dependent on a single creditor, the two largest political will cause sharp criticism of the party.
Social “What is happening is terrible for the credibility of Switzerland,” said Roger Nordmann, the leader of the Democrats. “This is a warning for Switzerland that there are too many big banks.”
Reuters Graphics Reuters Graphics
($1 = 0.9280 Swiss francs)
Added by Reuters bureaus report Post by Lincoln Feast; Edited by Sam Holmes
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Scott Murdoch
2023-03-21 08:26:07
Source – reuters
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