Credit Suisse: US insists banking system ‘sound’ as Swiss lender’s stock recovers – latest

Signature Bank’s collapse came stunningly fast, leaving behind the question of whether there was a fundamental flaw in the way it did business — or if it was just a victim of the panic that spread after the failure of Silicon Valley Bank.

There were few outward signs that Signature Bank was crumbling before the New York Department of Financial Services on Sunday seized the bank’s assets and asked the Federal Deposit Insurance Corp to take over its operations. The FDIC will run it as Signature Bridge Bank until it can be sold.

But leading up to the takeover, there were calls on social media warning depositors to get their funds out of the bank — and those were followed by a real-life frenzy of withdrawals. There hasn’t yet been a public accounting of exactly how much money was withdrawn from the bank with a history of being friendlier than most in the US to the cryptocurrency industry.

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A group of financial institutions are in talks to deposit $30bn in First Republic in what’s meant to be a sign of confidence in the banking system, sources told CNBC’s David Faber.

The deal is not done yet, the sources said, and the amounts were a moving target. The plan does not call for an acquisition of First Republic.

Bank of America, Wells Fargo, Citigroup and JPMorgan Chase will contribute about $5bn apiece, while Goldman Sachs and Morgan Stanley will deposit around $2.5bn, the sources said. Truist, PNC, US Bancorp, M&T Bank and Capital One will deposit about $1bn each.

As Wall Street reels from the swift demise of Silicon Valley Bank — the biggest American bank failure since the 2008 financial meltdown — some social media users are honing in on a single culprit: its socially aware, or “woke,” agenda.

But the Santa Clara-based institution’s professed commitment to diversity, equity and inclusion, or DEI, wasn’t a driver of the bank’s collapse, say banking and financial experts. Its poor investment strategies and a customer base prone to make devastating bank runs were.

Here’s a closer look at the facts.

Credit Suisse shares rebounded on Thursday after getting a lifeline from the Swiss central bank to shore up investor confidence but the rally lost ground against a febrile backdrop.

The Swiss bank’s announcement that it would make use of a $54bn loan from the Swiss National Bank helped stem heavy selling in financial markets on Thursday and prompted a modest rally in European equities.

Some in the market welcomed the news, others were cautious. JP Morgan analysts said the loan from the SNB would not be enough to soothe investor concerns and the “status quo was no longer an option”, leaving a takeover of Credit Suisse as the most likely outcome.

Last week’s collapse of two regional US banks has raised made investors and bank customers worry about the resilience of the financial system in the face of rising global interest rates.

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.

Yet Republican lawmakers have continued to return to their catch-all scapegoat – using “woke” as an umbrella term for anything related to diversity, progressive political platforms, LGBT+ inclusivity, antiracism initiatives or environmental activism – while advancing a nationwide legislative agenda singularly devoted to its destruction.

Alex Woodward reports.

Top Democrats in Congress are vowing to return campaign contributions tied to Silicon Valley Bank (SVB), the tech industry lender which failed last week after a bank run and was temporarily taken over by federal legislators.

Josh Marcus has the details.

Global banks have been in the eye of the storm this week, with fears growing over the stability of the banking sector and some likening the current situation to the 2008 financial crash.

Two events have fuelled the sense of panic. First, the collapse of Silicon Valley Bank in the US, and second, the woes at Swiss bank Credit Suisse that led it to take a £45 billion emergency loan from the central bank.

But how are these events linked and should we be worried?

Anna Wise reports.

Treasury Secretary Janet Yellen on Thursday told the Senate Finance Committee that the US banking system is “sound” and Americans can feel “confident” about their deposits in the wake of the second-largest bank collapse in America’s history late last week.

Speaking at the outset of a hearing to examine President Joe Biden’s budget request for the Treasury during the next fiscal year — the first appearance by an administration official at the Capitol since Mr Biden said the Federal Deposit Insurance Corporation would protect uninsured money at Silicon Valley Bank and Signature Bank, a move that some observers have criticised as a “bailout” — Ms Yellen said the decision showed the administration’s “resolve” to maintain Americans’ confidence in the US financial system.

Here’s the latest from Capitol Hill:

The largest banks in the US, including JPMorgan Chase are discussing a joint rescue of the San Francisco-based lender including a sizable capital infusion.

Citing people familiar with the details, the Journal reports that JPMorgan is working with Citigroup, Bank of America, and Wells Fargo to put together a lifeline for the bank.

The same people said that Morgan Stanley, Goldman Sachs, US Bancorp, and PNC Financial Services are also involved.

A deal may be made public as soon as today, though there is no certainty yet as to what the final package may look like and regulator approval would be required.

Banks interested in acquiring Silicon Valley Bank and Signature Bank must submit bids by 17 March, people familiar with the matter have told Reuters.

It is the second attempt of the US Federal Deposit Insurance Corp (FDIC) at selling SVB after a failed effort on Sunday.

Reuters adds:

The FDIC is aiming to sell both SVB and Signature in their entirety, while offers for parts of the banks could be considered if whole company sales do not happen, two of the sources said.

Only bidders with an existing bank charter will be allowed to study the banks’ financials ahead of submitting their offer, a move which is aimed at giving traditional lenders an advantage over private equity firms, the two sources said.

Any buyer of Signature must agree to give up all the crypto business at the bank, the two sources added.