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March 22 (Reuters) – Troubled USA creditor First Republic Bank The struggle to secure an infusion of capital by (FRC.N) widened on Wednesday bank sector, as authorities took steps to further strengthen financial stability.
Although recent market volatility has subsided, the Federal Reserve of the day The next meeting is now the main focus for investors, traders USA are differences of opinion on whether the central bank will have to end the hiking cycle to ensure financial stability.
The Fed’s brutal rate hikes are in part to curb inflation 20Since the ’08 financial crisis bank blamed as the cause of the biggest collapse in the sector.
Bankruptcy of Silicon Valley Bank, sinking under the weight of losses on bonds due to rising interest rates, for banks 10 A stormy period has started during the day and it is 3 for now billion Swiss franc (3.2 billion dollars) resulted in a Swiss regulator. Credit Suisse was taken over by rival UBS on Sunday.
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Credit Suisse’s write-off of Additional Tier-1 (AT1) bondholders has sent shockwaves through bank debt markets, and some Asian lenders may struggle to raise capital by issuing AT1 bonds, Citigroup said in a research note on Wednesday.
Medium size USA concerns persist about the health of its creditors, particularly the First Republic.
For now, Credit Suisse’s bailout, Europe banks (.SX7P) and U.S. regional lenders boosted shares, appearing to calm the worst fears of systemic contagion.
The S&P 500 banks index (.SPXBK) rose 3.6%, posting its biggest one-day gain since November.
However, First Republic’s ( FRC.N ) efforts to secure a capital infusion continued to falter on Tuesday, as the troubled regional lender began planning for the possibility that it may need to retrench or seek government support.
That sent First Republic shares down 9% in extended trading on Tuesday, up 60% and closing down 30% in regular trading. First Republic lost 80% of its market value this month.
The San Francisco-based bank is looking at ways to cut back if efforts to raise new capital fail, three people familiar with the matter told Reuters. JPMorgan Chase, 30 of the big banks billion helping the bank find new sources of capital after injecting dollar deposits failed to allay fears about its viability.
The scenarios were being discussed when top bank executives gathered in Washington for a planned two-day meeting starting Tuesday, sources familiar with the matter said.
Bloomberg News on Tuesday, citing people with knowledge of the situation news provides that among the options was the possibility that the government could play a role in removing assets from the First Republic, which was eroding the balance sheet.
‘BE SAFE’
Policymakers from Washington to Tokyo have stressed that the current turmoil is different from the crisis of 15 years ago, saying that banks are better capitalized and funds are more readily available.
Still, Australia’s prudential regulator has begun asking the country’s banks to declare exposure to startups and cryptocurrency-focused businesses following the collapse of Silicon Valley Bank, according to the Australian Financial Review.
US Treasury Secretary Janet Yellen said that despite the recent pressures, the country’s banking system is healthy.
Market value of US regional banks included in the S&P 500 regional bank index
Treasury Undersecretary Wally Adeyemo said the failures of Silicon Valley Bank and rival Signature Bank needed to be reviewed.
“It is imperative that we review the failures of the two banks in question to ensure that we have a set of rules and procedures for the banking system that continue to protect our economy and depositors across the country,” Adeyemo said at a conference on Tuesday. Event hosted by the US Hispanic Chamber of Commerce.
“Of course, we continue to monitor the current situation and consider what steps can be taken to further strengthen America’s financial stability,” he said, without elaborating.
To hold bank executives accountable in the US political the pressure continued to build. The chairman of the Senate Banking Committee said the panel will hold “the first of several hearings” on the collapse of SVB and Signature Bank on March 28.
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($1 = 0.9280 Swiss francs)
Added by Sumeet Chaterjee, Tatyana Bautzer, Saeed Azhar, Scott Murdoch, Tom Westbrook, Shubham Batra, Amruta Khandekar, Ankika Biswas, Noel Randewich and Francesco Canepa report Writing by Lincoln Feast Editing by Sam Holmes
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2023-03-22 07:19:43
Source – reuters
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