Shares in European banks fell sharply on Wednesday, with crisis-hit Credit Suisse plunging to new lows as renewed investor concerns raised tensions within the sector. Silicon Valley BankSudden collapse of
Regulators and financial authorities around the world have sought to allay fears of contagion after the tech-focused lender svb And another US bank failed last week, but concerns remain.
A more than 20% drop in Credit Suisse shares led European banking indices down more than 6%, while a five-year credit default swap (CDS) for the major Swiss bank set a new record, raising investors’ concerns. highlights growing concerns.
The Swiss National Bank declined to comment on Switzerland’s second largest bank.
“The markets are wild. We move from the problems of US banks to those of European banks, first of all Credit Suisse,” said Carlo Franchini, head of institutional clients at Banca Iphigeste in Milan.
In the United States, regional and large banks fell into the premarket. First Republic Bank was flat, with peers Western Alliance Bancorp and PacWest Bancorp down 2% and 12%, respectively.
Big banks including JPMorgan Chase, Citigroup and Bank of America were all hit between 2% and 4%.
BlackRock Chief Executive Laurence Fink warned on Wednesday that the US regional banking sector is at risk, and predicted higher inflation and rate hikes.
Fink described financial conditions as “priced at easy money” and said in an annual letter that he expected the US Federal Reserve to raise interest rates further.
He added that after the regional banking crisis, a “liquidity mismatch” could follow as low rates prompted some asset owners to increase their exposure to high-yield investments that are not as easy to sell.
The rapid rise in interest rates has made it difficult for some businesses to repay loans or service debt, increasing the potential for losses for lenders who are also worried about a recession.
However, European Central Bank policymakers are still leaning toward a half-percentage-point rate hike on Thursday, a source told Reuters, as they expect inflation to remain high.
Investors had begun to doubt the ECB’s commitment to another big rate hike as the SVB collapse rattled the markets.
But the source said the central bank was unlikely to deviate from its plan to hike rates by 50 basis points on Thursday because doing so would damage its credibility.
In the United States, attention is increasingly focused on the prospect of tighter regulation of banks, particularly mid-tier banks such as SVB and New York-based Signature Bank, whose collapse caused market turmoil.
Moody’s Investors Service on Tuesday revised its outlook on the US banking system to “negative” from “stable”, citing heightened risks to the sector.
The SVB shutdown forced President Joe Biden to seek assurances that the US financial system was safe and prompted emergency measures to provide more funding to banks.
And in an effort to avert a similar crisis in the future, the US Federal Reserve is considering tougher regulations and inspections for medium-sized banks similar in size to SVBs.
Earlier, the Tokyo Stock Exchange Bank Index jumped more than 4% after three consecutive days of heavy selling.
Investors were particularly concerned about the large bond holdings of Japan’s lenders, but Japanese Finance Minister Shunichi Suzuki said differences in the composition of deposits meant local banks would not face SVB-like incidents.
svb result
Wednesday’s selloff came after some relief on Tuesday when US Bank of America shares declined, aided by news that private equity and buyout firms are looking to scoop up some SVB assets.
And in the UK, HSBC’s top bosses have called in staff at SVB’s rescued UK branch to reassure customers that “their deposits are safe and loans are backed” as the integration process begins following its takeover. A memo from the bank showed.
Meanwhile, Charles Schwab Chief Executive Walt Bettinger said Tuesday that the bank has ample liquidity and is not currently seeking capital or deals.
Bettinger told Reuters the firm had seen $4 billion in flows in assets to its parent company on Friday as clients transferred assets from other firms to Schwab.
Regulators and financial authorities around the world have sought to allay fears of contagion after the tech-focused lender svb And another US bank failed last week, but concerns remain.
A more than 20% drop in Credit Suisse shares led European banking indices down more than 6%, while a five-year credit default swap (CDS) for the major Swiss bank set a new record, raising investors’ concerns. highlights growing concerns.
The Swiss National Bank declined to comment on Switzerland’s second largest bank.
“The markets are wild. We move from the problems of US banks to those of European banks, first of all Credit Suisse,” said Carlo Franchini, head of institutional clients at Banca Iphigeste in Milan.
In the United States, regional and large banks fell into the premarket. First Republic Bank was flat, with peers Western Alliance Bancorp and PacWest Bancorp down 2% and 12%, respectively.
Big banks including JPMorgan Chase, Citigroup and Bank of America were all hit between 2% and 4%.
BlackRock Chief Executive Laurence Fink warned on Wednesday that the US regional banking sector is at risk, and predicted higher inflation and rate hikes.
Fink described financial conditions as “priced at easy money” and said in an annual letter that he expected the US Federal Reserve to raise interest rates further.
He added that after the regional banking crisis, a “liquidity mismatch” could follow as low rates prompted some asset owners to increase their exposure to high-yield investments that are not as easy to sell.
The rapid rise in interest rates has made it difficult for some businesses to repay loans or service debt, increasing the potential for losses for lenders who are also worried about a recession.
However, European Central Bank policymakers are still leaning toward a half-percentage-point rate hike on Thursday, a source told Reuters, as they expect inflation to remain high.
Investors had begun to doubt the ECB’s commitment to another big rate hike as the SVB collapse rattled the markets.
But the source said the central bank was unlikely to deviate from its plan to hike rates by 50 basis points on Thursday because doing so would damage its credibility.
In the United States, attention is increasingly focused on the prospect of tighter regulation of banks, particularly mid-tier banks such as SVB and New York-based Signature Bank, whose collapse caused market turmoil.
Moody’s Investors Service on Tuesday revised its outlook on the US banking system to “negative” from “stable”, citing heightened risks to the sector.
The SVB shutdown forced President Joe Biden to seek assurances that the US financial system was safe and prompted emergency measures to provide more funding to banks.
And in an effort to avert a similar crisis in the future, the US Federal Reserve is considering tougher regulations and inspections for medium-sized banks similar in size to SVBs.
Earlier, the Tokyo Stock Exchange Bank Index jumped more than 4% after three consecutive days of heavy selling.
Investors were particularly concerned about the large bond holdings of Japan’s lenders, but Japanese Finance Minister Shunichi Suzuki said differences in the composition of deposits meant local banks would not face SVB-like incidents.
svb result
Wednesday’s selloff came after some relief on Tuesday when US Bank of America shares declined, aided by news that private equity and buyout firms are looking to scoop up some SVB assets.
And in the UK, HSBC’s top bosses have called in staff at SVB’s rescued UK branch to reassure customers that “their deposits are safe and loans are backed” as the integration process begins following its takeover. A memo from the bank showed.
Meanwhile, Charles Schwab Chief Executive Walt Bettinger said Tuesday that the bank has ample liquidity and is not currently seeking capital or deals.
Bettinger told Reuters the firm had seen $4 billion in flows in assets to its parent company on Friday as clients transferred assets from other firms to Schwab.
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