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March 17 (Reuters) – The European Central Bank (ECB) regulator does not expect the recent turmoil to spill over to eurozone banks, sources said on Friday. reserve.
On Thursday, the big US banks swooped in to bail out a San Francisco-based lender caught in market volatility caused by the failures of two other medium-sized US banks.
The rescue comes on the heels of embattled Credit Suisse (CSGN.S) using up to $54 billion in emergency central bank loans to boost liquidity. Shares of Switzerland’s second largest bank fell again on Friday despite the move.
The ECB, which raised interest rates on Thursday, held another ad hoc supervisory board meeting earlier this week in an unusual move ahead of its scheduled meeting next week.
A source familiar with the meeting told Reuters that the ECB’s supervisors did not expect the market turmoil to spill over to eurozone banks.
Frédéric Carrier, head of investment strategy, said: “The Swiss central bank’s intervention has provided some relief to markets, but investors may worry about the ultimate economic impact of aggressive monetary tightening by the ECB. Sentiment is likely to remain very volatile due to high volatility.” For RBC Wealth Management.
Frankfurt-listed First Republic shares rose as much as 5% in early trading on Friday. Bank shares rose 10% in New York on Thursday but fell 17% in aftermarket trading after revealing cash positions and needed emergency liquidity. Friday’s US pre-market trading showed a 5% drop.
The two deals and actions by policymakers helped restore some calm to global markets, but after a turbulent week for bank stocks, analysts and investors say the possibility of a full-blown banking crisis is over. I am still concerned that this is not the case.
The scale of the stress was underscored by data on Thursday that showed U.S. banks have asked the Federal Reserve for a record amount of emergency liquidity in recent days, after months of contraction, the central bank’s We pushed up the size of the balance sheet.
The First Republic deal was put together by leading brokers, including U.S. Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell and CEO Jamie Dimon, according to sources familiar with the matter.
“They keep the money in the First Republic and keep it alive for their own personal gain… stop the bank runs. Then they slowly take it away and the banks die a slow death.” We will do it,” said Research founder Matan Somasundaram. Sydney-based firm Deep Data Analytics said on Friday.
JPMorgan Chase (JPM.N), Citigroup (CN), Bank of America (BAC.N), Wells Fargo (WFC.N) and Goldman Sachs (GS.N), according to a bank statement. ) and Morgan Stanley (MS.N) were involved in the rescue.
The backing prevented an imminent collapse, but investors were surprised by First Republic’s slow disclosure.
“People are worried that the risk of contagion is real, and it’s undermining confidence,” said Karen Joritsuma, head of Australian equities at RBC Capital Markets.
“I don’t think we are in the middle of a global financial crisis. Balance sheets are much better than they were in 2008 and banks are better regulated,” she added. rice field.
Credit Suisse is the first major global bank to embark on an emergency lifeline since the 2008 financial crisis, amid doubts over central banks’ ability to sustain their aggressive interest rate hikes to curb inflation. rice field.
Lessons learned in 2008
For now, officials are confident the banking system is resilient and are trying to underscore that the current turmoil is different from the global financial crisis 15 years ago.
The ECB pushed for a 50 basis point rate hike, arguing that eurozone banks were in good shape and, if anything, that a rate hike should strengthen margins.
The focus now is on the Fed’s policy decision next week and whether it will continue to aggressively raise rates in an attempt to keep inflation under control.
In Asia, he said Singapore, Australia and New Zealand are monitoring financial markets, but he is confident that local banks are well-capitalized and can withstand major shocks.
Capital remains ample, but analysts say the A$300 billion ($201 billion) refinancing effort for Australia’s largest bank is set to become increasingly difficult as demand for new debt wanes. I’m here.
Japan’s finance ministry, financial regulator and central bank said they would meet on Friday to discuss progress.
Bank stocks have fallen globally since the Silicon Valley Bank collapsed last week. That’s because bond-related losses piled up during last year’s spike in interest rates, raising questions about what else is lurking in the broader banking system.
Pete Schroeder and Chris Prentiss of Washington, Nupur Anand of New York, Tom Westbrook and Ray Wee of Singapore, Scott Murdoch of Sydney, Noel Landewicz of Oakland, CA, Baraz Colanyi and Francesco of Frankfurt · Reported by Canepa, John O’Donnell, John Reville in Zurich. Written by Deepa Babington, Sam Holmes and Alexander Smith. Editing by Sonali Paul and Kirsten Donovan
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