Bank Freakout

Switzerland casts Asian bankers in a rich light

29 Mar 2023

Credit Suisse’s blow-up will speed up a rethink about where crazy rich Asians will park $180 trln of household wealth. Global banks’ risk appetite is shrinking even as HSBC and others ramp up in the region via acquisitions. Rising giants like Singapore’s DBS and UOB will benefit.

Powell is leader of the free world – for now

28 Mar 2023

The Federal Reserve chair has ever-larger powers and responsibilities. If he raises rates, he could spark a banking crisis and complicate Joe Biden’s re-election bid. If he lets up, prices will stay high. Powell may stay the course, but Biden isn’t going to like it.

Bank health barometer could use own health warning

28 Mar 2023

Stock market investors interpreted last week’s jump in Deutsche Bank’s credit default swaps as a sign of distress. Yet thin trading in parts of the $12 trln market for speculating on creditworthiness can exaggerate moves. Add social media and it can feed self-fulfilling spirals.

SVB sale puts too-big-to-fail risk in a new bottle

27 Mar 2023

First Citizens got a good deal buying Silicon Valley Bank’s assets. For regulators, it’s a tradeoff. The buyer’s balance sheet has nearly quadrupled in just over a year. Until flaws in overseeing fast-growing banks are fixed, promoting aggressive expansion brings new pitfalls.

Capital Calls: Saudi and Credit Suisse, EU patents

27 Mar 2023

Concise views on global finance: The resignation of the chairman of Saudi National Bank, Credit Suisse’s largest shareholder, may prompt a quiet period for other investors; big companies want Europe’s new system for registering intellectual property to cover more countries.

Bank investors grapple with scary post-truth world

24 Mar 2023

Shares in European lenders like Deutsche Bank fell by as much as 10%. There’s no clear problem, since they’re liquid and well-capitalized. But Credit Suisse effectively failed days after regulators declared it sound. It leaves markets jittery, and banks uncertain how to respond.

Bitcoin is a solution looking for a problem

24 Mar 2023

Peter Thiel says the cryptocurrency is an inflation hedge, and bitcoin’s price has soared since Silicon Valley Bank’s collapse. But his actions don’t match that advice, and the Fed’s backing of the system is antithetical. Plus, importantly, bitcoin, unlike gold, is speculative.

Capital Calls: Bank of England, Wonder drugs

23 Mar 2023

Concise views on global finance: The UK central bank has joined peers in raising rates, but there’s not much room to keep hiking. Meanwhile, a drug that might help smokers’ lung is could be good for makers Regeneron and Sanofi, but even better for society.

Swiss CoCo litigation may have a broader payoff

23 Mar 2023

Holders of Credit Suisse’s $17 bln contingent convertible bonds think authorities were wrong to wipe them out. A legal challenge will take years. Still, Bern might decide to placate angry investors. And a fight will discourage countries considering following the Swiss example.

Credit Suisse rescue sends shockwaves far and wide

23 Mar 2023

The ailing Swiss lender was saved by UBS with a $3 bln takeover. In this Viewsroom podcast, Breakingviews columnists debate why the deal pushes up bank funding costs, how the new mega-lender affects Switzerland’s financial system, and why bank deposits are becoming less reliable.

Deposit guarantees are the new Jedi mind trick

22 Mar 2023

Savings in US banks are safe, say Fed chief Jay Powell and Treasury Secretary Janet Yellen. If depositors believe them, they’re right, and confidence in the system should bounce back. The catch is that risk-free banking isn’t theirs to give. Even if it were, the cost is high.

Market nerves tie US rate-setters’ hands

22 Mar 2023

The Federal Reserve's quarter-point rate hike was the best it could do without creating other issues. Higher rates put more stress on banks, but investors expected such a move. Chair Jay Powell might not like following behind markets, but nor can he afford to surprise them.

Fed’s self-scrutiny starts off on the wrong foot

22 Mar 2023

Supervisory tsar Michael Barr is leading a probe into Silicon Valley Bank’s collapse. But the Federal Reserve’s tangled, partly centralized structure makes it ill-suited to conduct a warts-and-all review of its supervision. Banks don’t police themselves; the Fed shouldn’t either.

Swiss CoCo shakeout may yet help bank regulators

22 Mar 2023

The market for quasi-equity bonds is reeling after Credit Suisse wiped out its own ones. The higher cost of issuing the securities means banks may now roll over their maturing debt, rather than replace it as per the market norm. That could actually help financial stability.

Bank woes expose gaps in EU safety net

22 Mar 2023

As the US and Switzerland scramble to head off contagion, the European Union is watching from a shaky perch. While the euro zone probably could fend off a new banking crisis, it lacks some tools for doing so. Even a backstop for insuring retail deposits remains out of reach.

Fed can follow ECB, BoE on monetary tightrope

21 Mar 2023

Bank failures and high inflation complicate the US Federal Reserve’s interest rate decision on March 22. Its Western peers have shown how to fight rising prices while aiding financial stability. Taking the road more traveled would also ease traders' fears of new crises.

Saudi is far from the last Western bank bagholder

21 Mar 2023

Credit Suisse’s rescue by UBS will cost top shareholder Saudi National Bank over $1 bln. Abu Dhabi’s ADIA and Singapore’s GIC and Temasek also caught a falling knife after buying Western banks in 2007. Politics, and the Gulf’s growing oil riches, imply further loss-making punts.

Credit Suisse reinforces Japan’s offshore anxiety

21 Mar 2023

Global bank jitters have investors looking for weak links. Japanese lenders, with staid depositor bases, are unlikely targets for bank runs, but they hold $2 trln of overseas bonds with thin profit margins. They may not dump US Treasuries in haste - but rebalance they will.

India maps a viable next chapter for CoCos

21 Mar 2023

Local issuance of contingent capital froze after Yes Bank wrote down $1 bln in 2020, without wiping out shareholders - similar to Credit Suisse’s rinse. Fast forward: owners of the stuff are still fighting the move, but this niche of the bond market has come back stronger too.

Banking mayhem envelops TD’s stalled $13 bln deal

20 Mar 2023

The Canadian lender’s agreed takeover of US peer First Horizon has been snarled up by regulators for over a year. Now, there are fresh concerns about the trouble unfolding in regional banking. The rapidly changing calculus threatens to upend the merger – and some investors, too.