Category: banks

The crisis at Credit Suisse has traders wondering who’s next. Japanese lenders, with their staid depositor bases, look like unlikely targets for bank runs. Yet their collective overseas bond portfolio is in focus. 

For years the country’s ultra-low interest rates encouraged deposit-taking institutions, lenders and other investors to borrow yen and buy higher-yielding but relatively safe assets. This helped Japan overtake China as the top foreign owner of U.S. Treasuries in 2019; they owned an estimated $2 trillion of foreign bonds as of last year. On paper the sequence of rate hikes in Western economies make such positions even more profitable.

Yet the rising cost of short-term dollar and euro credit, combined with extreme yen volatility, have made hedging much more expensive. The inversion of the American yield curve makes it unprofitable to borrow short-term dollars and buy long-term Treasuries. Japan Inc was reducing positions well before Silicon Valley Bank imploded.

As the Federal Reserve raises interest rates again, credit card debt is already at a record high, and more people are carrying debt month to month.

The Fed’s interest rate increases are meant to fight inflation, but they’ve also led to higher annual percentage rates (APRs) for people with credit card debt, which means they pay more in interest. The Fed announced Wednesday that it would increase rates another quarter of a point.

With inflation still high, people are leaning on their credit cards more for everyday purchases.

“It’s the economy, inflation, gas prices, and food costs,” said Lance DeJesus, 46, kitchen manager at the Golden Corral in York, Pennsylvania. “A year ago, you could go to the grocery store with a hundred bucks and come out with a bunch of bags. Now, I come out with just one bag.”

The cost-of-living squeeze has shown signs of easing for the first time in the past financial year – this as the start of the new school year sparked a spending boom. This was according to Bankwest’s Spend Trends report for February, which tracked WA customer credit and debit activity. Bankwest’s monthly Spend Trends analysis showed a 3% rise in the average value of transactions month-on-month, which was far less than 30% increase in both the number of customers spending, and…

The first lawsuit against JP Morgan, filed by an unnamed “Jane Doe” representing a group of the pedophile’s victims, argues the US-based bank “knowingly benefited from participating in a sex trafficking venture” led by Epstein, who was a client there from 1998 through 2013, and “negligently failed to exercise reasonable care to prevent physical harm.”  The US Virgin Islands’ own suit against JP Morgan alleges the bank enabled the late predator’s sex trafficking operation, though Judge Rakoff also threw out three of the four claims in that suit. 

Eight of the 12 claims from Doe’s lawsuit against Deutsche Bank, which took on Epstein as a client in 2013, even though he had been a registered sex offender since 2008, were also dismissed.  Rakoff’s decision allows the plaintiffs to pursue further pretrial discovery. Former JP Morgan CEO Jes Staley, a central figure in both lawsuits against the bank who resigned in 2021 over his links with Epstein, is reportedly due to be deposed later this week. Court filings show he exchanged over 1,200 emails with Epstein, with more than a few referencing young women. Last week, Rakoff tentatively scheduled trial dates for both JP Morgan cases for October 23.

Russian President Vladimir Putin has announced Russia’s readiness to switch to the yuan in foreign trade settlements with countries in Asia, Latin America and Africa.

He said this during the Russian-Chinese talks with the participation of Chinese leader Xi Jinping, RBC reports.

Currently, the share of the yuan in Russia’s export calculations is about 16%.

“We are in favour of using the Chinese yuan in settlements between Russia and the countries of Asia, Africa, and Latin America. I am sure that these forms of payments in yuan will be developed between Russian partners and their colleagues in third countries,” Putin said.

According to [Putin], national currencies are already actively used in Russian-Chinese trade.

German and US authorities, supported by Europol, have targeted ChipMixer, a cryptocurrency mixer used to keep crypto transactions private. The investigation was also supported by Belgium, Poland and Switzerland. On 15 March, national authorities took down the infrastructure of the platform, seizing 4 servers, and also seizing about 1909 Bitcoins in 55 transactions (approx. EUR 44.2 million) and 7 TB of data.

While Silicon Valley Bank was seized by the Federal Deposit Insurance Corporation after its value collapsed following a bank run last Friday, the rest of SVB Financial Group will be sold off in an effort to repay creditors and large depositors, though it will not cover everyone who lost money in the collapse. A legal battle is expected to follow. Earlier this week, a shareholder lawsuit filed in the US district court for the Northern District of California alleged that several of SVB’s quarterly and annual financial reports had not fully disclosed the risks being communicated by the Federal Reserve that looming interests rate hikes “had the potential to cause irrevocable damage to the company.” 

While the FDIC only covers customer deposits under $250,000, the administration of President Joe Biden stepped in after SVB’s collapse to guarantee those exceeding that amount, rankling critics who see it as a bailout masquerading as a regulatory action. An inordinately large percentage – 94% – of SVB’s deposits exceeded the $250,000 cutoff, about twice the typical share at other banks. Senate Republicans pointed out that the banks that didn’t fail would be unfairly penalized when their own rates increased to cover the hefty payouts to depositors, costs which would ultimately be passed onto the taxpayer, putting them on the hook for a bailout after all. New York-based Signature Bank collapsed just days after SVB, triggering fears of a wider contagion even as the president attempted to reassure Americans that their finances were safe. Similar to SVB, 90% of its deposits exceeded the FDIC cap.

Eleven of the biggest banks in the U.S. agree to provide funds to shore up First Republic as shares plummet by as much as 70 per cent over the past week.

San Francisco-based First Republic is caught in the fallout from Silicon Valley Bank’s collapse last Friday. Its shares have plummeted as much as 70 per cent over the past week. Much like SVB, First Republic has not reported any sudden loan losses or writedowns. But clients nervous about its stability have been pulling deposits and transferring them to larger institutions, something known as a flight to quality.

With First Republic looking like the next domino to fall in a cascade of bank failures, the larger lenders and investment banks are hoping their deposits will keep it standing, and prevent the situation from spiralling out of control.

It is an unusual approach.

Guo Wengui, a Chinese billionaire known for his opposition to Beijing and ties to the administration of former US President Donald Trump, has been charged in the United States with defrauding investors out of $1bn.

Guo, also known as Ho Wan Kwok and Miles Guo, was arrested in New York on Wednesday over an alleged conspiracy involving the misappropriation of hundreds of millions of dollars obtained from his thousands of followers online, the US Department of Justice said in a statement.

Guo is accused of pocketing money raised from investors who were promised outsized returns for backing a number of his business ventures, including the media company GTV Media Group, an exclusive membership club known as G|CLUBS and a cryptocurrency called Himalaya Coin.

Latitude Financial has revealed it has been hit by a sophisticated and malicious cyberattack that has compromised a total of 328,000 separate pieces of data that it had sourced from its customers. The loans, credit card and insurance provider said it had detected unusual activity on its systems over the last few days that was believed to have originated from a major vendor used by Latitude.

The company said the attacker appeared to have used employee login credentials to steal personal information that was being held by two other of Latitude’s service providers. In a statement to the ASX on Thursday morning, Latitude said approximately 103,000 identifications documents – 97% of which were drivers’ licences – were stolen from the first service provider, while 225,000 customer records were stolen from a second service provider.

Regulators, policymakers and bankers are looking at the role that digital messaging and social media may have played in the collapse, and whether banks are entering an age when the psychological behavior behind a bank run — mass fear from depositors of losing their savings — may be amplified and go viral quicker than bank officers and regulators can successfully respond.

Shares of Swiss bank lose more than a quarter of their value in one day, dragging down European and US markets.

Silicon Valley Bank’s parent company and two senior executives are facing a class-action lawsuit in the United States, where shareholders have accused the financial institution of failing to disclose the risks that anticipated interest rate hikes would have on its business.

The lawsuit, filed in federal court in the Northern District of California on Monday, is seeking unspecified damages from SVB Financial Group and its Chief Financial Officer Daniel Beck, as well as the bank’s Chief Executive Officer Greg Becker.

The bank collapsed and its assets were seized by the US government late last week after a mass withdrawal of funds by customers.

The lawsuit, which accuses SVB of violating federal securities laws, noted that the Federal Reserve, the US central bank, had signaled as early as 2021 that it would increase interest rates to tame inflation.

Credit Suisse shares tumbled more than 20% in pre-market trading on Wednesday after its biggest backer ruled out investing any more into the troubled Swiss bank. 

“The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory,” Saudi National Bank Chairman Ammar Al Khudairy said in a Bloomberg interview, responding to whether the Gulf lender would dole out more money. 

Shares in Credit Suisse slid 21.91% to $1.96 in pre-market trading in US-listed shares. Meanwhile, in Zurich, it’s stock fell 19% to $1.79, marking a new record low on Switzerland’s stock exchange. The bank’s stock is down about 24% since the start of the year.

US stocks tumbled Wednesday, as the banking sector saw renewed turmoil — but this time focused on Europe. US-listed shares of Credit Suisse plunged more than 20%, as Saudi backers ruled out further investment in the embattled lender.

Since regulators shut down Silicon Valley Bank on Friday, investors have been concerned about another 2008-style financial crisis. On Tuesday, Moody’s cut its outlook for the entire US banking system. Meanwhile, the Labor Department reported wholesale prices posted a monthly decline of 0.1% in February, versus expectations for a 0.3% increase.