© Reuters. Customers wait in line outside a Silicon Valley Bank branch in Wellesley, Massachusetts, U.S., March 13, 2023. REUTERS/Brian Snyder
(Reuters) – Shockwaves from the collapse of Silicon Valley Bank hit shares of global banks on Tuesday, as assurances from President Joe Biden and other lawmakers failed to assuage market concerns about contagion and prompted a rethink of interest rate prospects.
Biden said his administration’s actions meant Americans could have confidence in their banking system and also promised tighter regulation.
COLLAPSE
*Start-up-focused lender SVB Financial Group on March 10 became the largest bank to fail since the 2008 financial crisis, in a collapse that rocked global markets.
*Banking regulators said on Sunday that SVB depositors would have access to their funds on Monday, allaying fears that startups would struggle to pay their employees this week.
* President Biden addressed the banking crisis Monday, hinting at new regulation of banks, yet he faces a divided Congress that is unlikely to pass tougher new rules.
*State regulators closed the New York headquarters signature bank (NASDAQ:) on Sunday, the third-biggest bankruptcy in US banking history.
* A Federal Deposit Insurance Corporation employee told customers who lined up outside SVB’s headquarters in Santa Clara on Monday: “You will be able to transact business as usual.”
* In Britain, HSBC bought the UK arm of Silicon Valley Bank for a token pound on Monday, rescuing a key lender to technology startups in England.
GLOBAL IMPLICATIONS
* The plunge in global bank shares continued in Asia on Tuesday, following a brutal sell-off on Wall Street on Monday in which shares of JPMorgan Chase & Co (NYSE:), Citigroup (NYSE:) and fargo wells (NYSE:) all ground lost.
* Japan’s financial shares led losses in Asian trade, while shares of HSBC in Hong Kong fell to their lowest level since January 12, following declines on the London-listed counter.
* The dollar has weakened as markets bet the Federal Reserve will ease, if not halt, its interest rate hikes to curb inflation following the sudden collapse of Silicon Valley Bank.
* Canada’s banking regulator said it was increasing its monitoring of the financial health of domestic banks following the collapse of SVB, The Globe and Mail reported Monday.
APPOINTMENT
“Americans can trust that the banking system is secure… Your deposits will be there when you need them.” – US President Joe Biden.
“I recognize that the last few days have been an extremely challenging time for our customers and our employees, and we are grateful for the support of the incredible community we serve.” – Tim Mayopoulos, FDIC-appointed CEO of SVB.
