Banks

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.

Spooked dealmakers scurry back into their foxholes

23 Mar 2023

Beyond high-profile cases against Google, US trustbuster Jonathan Kanter is rewriting the anti-consolidation playbook. As he shreds historic guidance, pursues criminal charges and focuses on labor, CEOs are putting M&A on ice. It’s worth waiting to see which policies stick.

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.

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.

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.

Signature Bank buyer gets a crisis dividend

20 Mar 2023

US watchdogs tend to give bank mergers a tough time until a lender hits the skids. New York Community Bancorp’s stock jumped 39% after getting a lightning-fast nod to snap up chunks of its failed rival for a song. Regulators can be principled or fast in a crisis, but rarely both.

Switzerland takes CoCos to point of non-viability

20 Mar 2023

Holders of Credit Suisse’s $17 bln of contingent capital will lose the lot despite UBS paying $3 bln for its rival’s shares. The bonds boomed after the last crisis, but uncertain conditions make them riskier than bank equity. If investors flee, they’ll be less useful for banks.

UBS salvages most value from Credit Suisse wreck

19 Mar 2023

The Swiss bank is scooping up its ailing arch-rival for just $3.2 bln in a state-arranged rescue. In return for shoring up confidence it gets a balance sheet backstop, a competition waiver, big savings and a giant capital boost. It also becomes bigger and more systemic than ever.

Americans may not get loans. LBOs? They’re fine

17 Mar 2023

SVB’s rescue means that smaller banks will tighten lending standards, making it more difficult for people to get financing for homes and businesses. But this week, three big private equity deals landed debt from banks. Financial conditions are tightening, but only for some.

Startups lost a wheel greaser with SVB blowup

17 Mar 2023

Venture capital funding was drying up before the collapse of Silicon Valley Bank. But SVB offered loans to new companies and played an important role bridging capital calls between VC managers and investors. Even with one fewer player, the industry gets rustier.

Where is Silicon Valley’s J. Pierpont Morgan?

17 Mar 2023

JPMorgan chief Jamie Dimon channeled his predecessor by corralling fellow bank CEOs to support First Republic. Financiers band together, even with regulators, when the going gets tough. Silicon Valley, more fragmented and libertarian, lacks such a savior. That could change.

Capital Calls: FedEx delivers, for now

17 Mar 2023

Concise views on global finance: Shares in the delivery company shot up over 10% on Friday, as cost-cutting measures pay off. Those benefits could easily dwindle.