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Aftermath of Credit Suisse rescue: What you need to know

Published 03/13/2023, 06:32 PM
Updated 03/21/2023, 03:53 PM
© Reuters. Customers wait in line outside a branch of the Silicon Valley Bank in Wellesley, Massachusetts, U.S., March 13, 2023.     REUTERS/Brian Snyder

© Reuters. Customers wait in line outside a branch of the Silicon Valley Bank in Wellesley, Massachusetts, U.S., March 13, 2023. REUTERS/Brian Snyder

(Reuters) - Investors stepped cautiously into bank stocks on Tuesday, emboldened by the rescue of Credit Suisse, with share prices inching tentatively higher amid continuing concerns about smaller U.S. lenders and further financial market ructions.

DEVELOPMENTS

* Attention now on this week's meeting of the U.S. Federal Reserve, with traders wondering whether the central bank's relentless rate hikes - blamed by some for sparking the crisis - might be at an end.

* U.S. Treasury Secretary Janet Yellen said the U.S. banking system is stabilizing after strong actions from regulators, but further steps to protect depositors may be needed if smaller institutions suffer runs that threaten more contagion.

* The European Central Bank's top bank supervisor Andrea Enria said euro zone banks increased their capital ratios late last year and remain solid, a message echoed by Spanish ECB policymaker Pablo Hernandez de Cos. But Enria warned banks against being "caught off guard" by rising interest rates.

* Sweden's banks are well-capitalised, central bank chief Erik Thedeen said.

* Turmoil in the banking sector is hurting investor confidence, surveys showed, including the German ZEW index of sentiment which ended a five-month streak of gains.

* The Bank for International Settlements, said it fully supported recent actions taken by central banks to address banking system problems.

* Britain's legal framework is clear about the treatment of shareholders and creditors in the event of a bank collapse, financial services minister Andrew Griffith said. What is AT1 debt?

* The Swiss Banking Association said credit supply would not be restricted by the demise of Credit Suisse, and that it saw a "prosperous future".

* Credit Suisse on Tuesday kicked off its annual Asian Investment Conference in Hong Kong, although CEO Ulrich Koerner, who was expected to attend the conference, dropped out.

MARKET REACTION

* Europe's bank shares and bonds gained.

* U.S. stocks rallied.

ANALYSIS

* Switzerland's secretive Credit Suisse rescue rocks global finance

QUOTES

* "Our intervention was necessary to protect the broader U.S. banking system," U.S. Treasury Secretary Yellen said. "And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion."

© Reuters. FILE PHOTO: A view shows logo of Swiss bank Credit Suisse in front of an office building in Zurich, Switzerland March 16, 2023. REUTERS/Denis Balibouse/File Photo

* "Increasing interest rates and quantitative tightening require banks to sharpen their focus on liquidity and funding risks," the ECB's top banking supervisor Enria said. "There is a risk that banks might be caught off guard."

* Credibility "is not destroyed, but it's not good," Swiss Banking Association chairman Marcel Rohner said.

Latest comments

History repeating itself
did this not just happen in 2008...... always a big surprise when interest rates rise and no one in government can see that slow and deliberate action is always going to win out  vs knee jerk reactions. powell needs to be fired
Bank regulations put in place under Obama were de-regulated under Trump; that allowed bank to be under-hedged for interest rate rising.
A) Is it true that the Central Banks are now buying Gov. Treasury Department Bonds and Corporate Bonds? B) Also, that the Joyce Mafia Family Is Running The Operation ? If that is the case, the $$ U S soon to be good to short. 🗑️👎.
UBS just been forced into an arranged marriage, and finally got his first look into the new homely bride, and she ain't pretty...
Hum… wrong interpretation, it should be like two colleagues have been competing for ages, now one got promoted and get to head over the other one
Not forced.  UBS got plenty of incentives from the gov't.
Another problem for CS became what happened today: too many useless MDs, they only MD because they were there long enough not because they are good
The biggest problem for CS was its investment banking was way too greedy! They wont take lower risk business for lower margin, that killed them badly
Nothing solved, just a bigger problem.
WOKE Has Taken Over The West. Capitalism and XYZ Generation Are At Odds. It Started 30 Years Already. And The WOKE Program Favors XYZ. Capitalism Is In SHAMBLES.
I have never met a single person that proclaimed to be “woke.” I’ve heard and seen thousands of comments of people claiming the “woke” have done “this,” or are to blame for “that.” Another invented term not based in reality but all to real to imaginative and fear-mongering types…
... then you are not very smart or informed.. maybe stop allowing yourself to be brainwashed by MSNBC and CNN.
The retrumplican elite wants it's base sleepy, the better to drink its koolaid w/out questions.
Yellen saying the us banking system is strong is enough for anyone with a brain to know it’s not. She was shaking Friday in front of congress. Mental breakdown soon
Looks like Fake Pocahontas wants to raise FDIC Insurance to save her Multi Millionaire palls! Lmao 🤣
She can not do simple math. Her only strong point is lying about her heritage.
ist not the FDIC that worries investors, they pull their money out public traded banks, since they are not protected. this is not a bankrun for cash either. what we have seen last few weeks was a stock dump. FED needs to wake up and protect investors too or we will see all banks drop to zero very soon.
Wake up and allow inflation to run wild? Sober up.
All sanctions on Putin.... and The West.. and allies going popper.... Shallow system...Something is Boomeranging... on West...?? Food for thought...
Putin is untransparent 🚽🚽 The West is!
sulabh a piece of incoherent nonsense in an attempt to undermine the west and support putins murder of Ukranian children..
“Out of many there can only be one “ Optimus Prime
My broker has always been doing exploit margin trading and I’ve been an investor of theirs for years now. Meanwhile I’m also a dividend investor, my husband and I have invested in the s&p500 and multiple stocks through this broker "Klaus Cassius", both through my TSP with the government and through fidelity in his 401-k. My broker cashed out $370k for us from the S&P and invested in short term… Since 2 months ago we were 100% in the S&P after over a few times. I’m retiring at the end of the month at 60, while my husband will retire next year at 65. We currently have $5.7 million in profit savings working with my broker from very little capital at hand that time. They’ve helped multiple people in boosting their savings, net-worth, income etc. and this was quite easy for me as I didn’t have to task my brain too hard on what financial decisions that would secure my future..
Unclescam needs this merger go thru to limit the spillover effects from across the Atlantic. There is no China backstop this time around. That bridge was burned a long time ago
Always remember that Switzerland is not an EU member...
True technically, But it also doesn't have its own foreign or banking policies either...
CS is a global player. This should be enough to destabilize global banking system.
you can see people's party affiliation by their comments. It's ridiculous if you think this happened because of GREED. They bought crap paper US bonds and got stuck on the wrong side of liquidity. Would you invest millions of dollars in a business without being able to profit more than a savings account? The wealthy are why we have jobs and get a paycheck.
Very true. And there's a reason why unrestrained capitalism has always led to oligarchs and then aristocratic governments in every single civilization in history. Markets are needed, but worship of the wealthy is for boot lickers.
there poorer then me because they need money. i need GOD i've never felt poor and i've lost money in the market and i'm still here
Why is it always either socialism or unrestrained capitalism with you people? As if there is no middle ground.
fail is inevitable...... brace for impact
Fear of banks collapsing and financial instability but banks upgrading each other.......
Banks aren't necessarily evil. It's the evil greed in the bank execs and the crooked Feds that pick the winners(the already super wealthy) and the losers(general public and taxpayers). The central bank system is rigged and was put in place by a crooked backdoor deal.
corporate world in its entirety. how bout if we start there.... greed at its finest!
Good news for Gold metel..
up news
Yes yes yes
Most European banks have not recovered from the US financial disaster of 2008. The Swiss are particularly hurt after their banking system was torpedoed by US gov dismantling of its banking secrecy all because th we IRS needed more cash from overseas Americans who stashed. SVB is just the beginning of karma
It had more to do with years of negative interest rates
It is funny to watch these banks collapse. I am a small fish, but I withdrew everything I had in saving in some of these failing banks. I like to think I am making it that tiny bit worse for these greedy bankers. Bye bye USA.
ZERO UPSIDE in keeping USD deposits in a Non-Top 3 bank. ZERO1
greed's are everywhere and it doesn't have to be bankers. your retirement account is affected when banks not do well
yes! get your money out now and hide it in your mattress 🤡
gold up down
Up, new ATH soon...
Cheap money for too long is the overriding factor
jim without playing the blamegame, I do not disagree with you.. however, without proper regulatory measures, there's no stopping the self-destructive greed..
Bernanke started the beginning of the end with his QE instead of making the guilty take their medicine and reset. Smart folks all said it was a huge mistake and would not end well.
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