Swiss regulators pledged a liquidity lifeline to Credit Suisse (CSGN.S) in an unprecedented move by a central bank after the flagship Swiss lender's shares tumbled as much as 30% on Wednesday.
The steep drop in Credit Suisse shares unnerved investors already on edge after the collapse of U.S.-based banks Silicon Valley Bank and Signature Bank.
DEVELOPMENTS
* In a joint statement, the Swiss financial regulator FINMA and the nation's central bank sought to ease investor fears around Credit Suisse, saying it "meets the capital and liquidity requirements imposed on systemically important banks." They said the bank could access liquidity from the central bank if needed.
* Credit Suisse said it welcomed the statement of support from the Swiss National Bank and FINMA.
* SVB Financial Group (SIVB.O), the company whose former subsidiary Silicon Valley Bank was taken over by U.S. banking regulators last week, is exploring seeking bankruptcy protection as one option for selling assets that include its investment bank and venture capital business, people familiar with the matter said.
* Regulators at the U.S. Federal Deposit Insurance Corp (FDIC) have tapped investment bank Piper Sandler Companies (PIPR.N) to relaunch the auction of Silicon Valley Bank, people familiar with the matter said on Wednesday.
* The European Central Bank has contacted banks on its watch to quiz them on their exposure to struggling Swiss lender Credit Suisse CSGN.S, two supervisory sources told Reuters. One of the sources said, however, that they saw Credit Suisse's problems as specific to that bank, rather than being systemic.
* The U.S. Treasury is monitoring the situation around Credit Suisse and is in touch with global counterparts about it, a Treasury spokesperson said on Wednesday.
* BlackRock Inc (BLK.N) Chief Executive Laurence Fink warned the U.S. regional banking sector remains at risk after the collapse of Silicon Valley and that inflation will persist and rates would continue to rise.
* Credit Suisse (CSGN.S) chairman Axel Lehmann said state assistance "isn't a topic" for the bank as it seeks to recover from a string of scandals that have undermined the confidence of investors and clients, Bloomberg reported on Wednesday.
* S&P has not placed other U.S. banks on CreditWatch negative since First Republic Bank as it has not seen widespread deposit outflows, the ratings agency said hours after Moody's cut its outlook on the U.S. banking system to negative.
* The U.S. Federal Reserve will not raise interest rates next week with regional banks playing key role in U.S. credit extension, Apollo Global Management's chief economist said.
* The Federal Reserve is considering tougher rules and oversight for midsize banks similar in size to SVB, a source familiar with the matter said on Tuesday.
MARKETS
* Shares in European banks got pummelled as Credit Suisse plunged as much as 30% after the lender's biggest shareholder said it could not raise its 10% stake citing regulatory issues.
* MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.6%, having slid 1.7% on Tuesday. Japan's Nikkei index was flat (.N225) while an index of Japanese banks, which has slid 8% this week, jumped over 3% (.IBNKS.T).
* On Wall Street, major indexes closed down on Wednesday, with big U.S. banks including JPMorgan Chase & Co (JPM.N), Citigroup (C.N) and Bank of America Corp (BAC.N) falling. The KBW regional banking index (.KRX) declined 1.57%.
* Yields on U.S. government bonds fell after problems at Credit Suisse stoked fears about the impact of rising yields on the banking sector. U.S. two-year yields, which reflect interest rate expectations, dropped to 3.72%, the lowest since September and were last down 23.8 basis points (bps) at 3.989%.
* Euro zone bond yields also tumbled, with Germany's two year yield dropping 30 basis points (bps) to 2.61%, heading back towards the lows it touched a day earlier.
QUOTES
* “It’s too early to know how widespread the damage is,” BlackRock CEO Laurence Fink wrote in an annual letter to investors. “The regulatory response has so far been swift, and decisive actions have helped stave off contagion risks. But markets remain on edge.”
* "Key central banks have all the tools now necessary to stem contagion," said Salman Ahmed, Global Head Of Marco And Strategic Asset Allocation, Fidelity International, London.
