Live updates: Asian markets down amid unease; Credit Suisse to tap up to $53.7B in loans
Credit Suisse #CreditSuisse
Credit Suisse said early Thursday that it would borrow up to $53.7 billion from Switzerland’s central bank to support its business, as market contagion from the collapse of Silicon Valley Bank deepens and global authorities look to avoid a repeat of the 2008 financial crisis. The troubled Swiss bank is much larger and more enmeshed in the global financial system than SVB and Signature Bank of New York.
Asian equities sold off, with Hong Kong’s Hang Seng Index and Japan’s bank-heavy Topix down 1.55 and 1.29 percent, respectively, as of about noon local time. Investors flocked to safe-haven assets such as gold and government bonds. The Credit Suisse announcement helped limit a possible rout.
1:03 AM: First Republic Bank reportedly considering sale after rating downgrade
First Republic Bank is considering a sale after the midsize Bay Area lender was rattled by the reverberations of the Silicon Valley Bank collapse, according to Bloomberg.
The reported deliberations come as the San Francisco-based bank’s credit rating was downgraded to junk Wednesday by the S&P and Fitch rating agencies. A spokesman for First Republic declined to comment on Bloomberg’s reporting, which cited anonymous sources.
Fitch said First Republic’s “funding and liquidity profile has changed and represents a ‘weakest link.’”
Shares in First Republic were down more than 21 percent at market close on Wednesday.
By: Bryan Pietsch
12:48 AM: Silicon Valley Bank failure renews focus on a 2018 deregulation law
What to know about the SVB collapse, rescue plan
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The collapses of Silicon Valley Bank and Signature Bank over the weekend have renewed interest in a 2018 bill that rolled back several banking regulations that were put in place after the 2008 financial crisis.
The bill, led by Sen. Mike Crapo (R-Idaho), scaled down requirements imposed under the 2010 Dodd-Frank law and reclassified the size of banks that would have to undergo increased regulatory scrutiny, raising that threshold for some from $50 billion in assets to $250 billion in assets. Since Silicon Valley Bank had roughly $209 billion in assets, it was exempt from those more stringent regulations.
But lawmakers who voted for the regulatory easing of capital requirements and other measures in 2018 are standing by their position even as it threatens to resurface a major divide between liberal and more moderate Democrats. And with a Republican-led House and disagreement among Democrats over the law’s impact on SVB’s collapse, there is little desire to revisit the rule to reinstate more stringent provisions for small and midsize banks.
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By: Camila DeChalus and Leigh Ann Caldwell
12:29 AM: Analysis from Kelly Kasulis Cho, Breaking News Reporter/Editor
New Zealand’s economy shrank by 0.6 percent in the fourth quarter of 2022, raising the specter of a future recession.
The Pacific country’s central bank had forecast an expansion of 0.7 percent. It hiked rates by 0.5 percentage points in February, but future sharp increases are now seen as less likely.
12:16 AM: Asian equities slip midday amid Credit Suisse jitters
Asian markets were down at midday local time Thursday, with shares in many mega banks sharply selling off as jitters from Credit Suisse’s struggle spread to Asia.
Hong Kong’s Hang Seng Index was down 1.6 percent and Tokyo’s Nikkei fell just shy of 1 percent, with the more bank-heavy Topix dropping 1.3 percent. The Kospi in Seoul shed 0.2 percent, and China’s SSE Index fell half a percent.
Japan’s Mitsubishi UFJ Financial Group was down 3.84 percent and Hana Financial Group in South Korea fell 2.25 percent. But China’s banks — more insulated from the global tumult — were up slightly: The Industrial and Commercial Bank of China was up 1.57 percent and China Construction Bank was up 1.34 percent.
By: Bryan Pietsch
12:15 AM: Credit Suisse to borrow up to $53.7 billion from Swiss central bank
Credit Suisse crisis grips world markets
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Fears for the stability of the global financial system rose Wednesday after Credit Suisse disclosed problems in its financial reporting and said it would tap up to $53.7 billion in aid from Switzerland’s central bank, raising turmoil in the markets in the wake of Silicon Valley Bank’s collapse.
The Swiss bank announced it would borrow from the Swiss National Bank late Wednesday, after its shares plunged on its disclosure that it had uncovered “material weaknesses” relating to its financial reporting. The Dow Jones industrial average fell by almost 1 percent Wednesday and European banking stocks tumbled, contributing to a 3 percent fall in the Pan-European Stoxx 600 index.
Compounding Credit Suisse’s problems, the bank’s largest investor, Saudi National Bank, signaled on Wednesday that it would not be rushing in with more cash to help buttress the firm.
Credit Suisse has struggled with a host of problems for years, and its latest troubles differ from those that brought down SVB. But the Swiss bank is much larger and more integrated with the global financial system, and its problems come amid growing worries about bank stability globally.
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By: Jeanne Whalen, Rachel Lerman and Steven Mufson