Aurelia Butler

(Reuters) – Large U.S. banks injected $30 billion in deposits into First Republic Bank (NYSE:FRC) on Thursday, swooping in to rescue the lender caught up in a widening crisis triggered by the collapse of two other mid-size U.S. lenders over the past week. Banking stocks globally have been battered since Silicon Valley Bank collapsed last week due to bond-related losses that piled up when interest rates surged last year, raising questions about what else might be lurking in the wider banking system. Within days, the market turmoil had ensnared Swiss lender Credit Suisse, forcing it to borrow up to $54 billion from Switzerland’s central bank to shore up liquidity. By Thursday afternoon, the spotlight whipsawed back to the United States as big banks led an effort to prop up support for First Republic, a regional lender whose shares had tumbled 70% in the last nine trading sessions. GRAPHIC – First Republic Bank’s stock market collapse Some of the biggest U.S. banking names including JPMorgan Chase & Co (NYSE:JPM), Citigroup Inc (NYSE:C), Bank of America Corp (NYSE:BAC), Wells Fargo (NYSE:WFC) & Co, Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) were involved in the rescue, according to a statement from the banks.The deal was put together by power brokers including U.S. Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and JPMorgan Chase CEO Jamie Dimon, who discussed the package on Tuesday, according to a source familiar with the situation. U.S. regulators said the show of support was most welcome, and showed the resilience of the banking system.A round of financing on Sunday raised through JPMorgan had given First Republic access to $70 billion in funds. But that failed to calm investors as worries of a contagion deepened with the demise of Signature Bank (NASDAQ:SBNY) to follow that of SVB and depositors began moving cash to larger lenders.First Republic Bank’s stock closed up 10% on news of the rescue but its shares fell 18% in after-market trading, after the bank said it would suspend its dividend.The bank’s stock price is down more than 70% since March 6. News of the rescue also helped boost Wall Street indexes, with JP Morgan, Morgan Stanley and Bank of America all up more than 1%, while the benchmark S&P 500 Banks Index recovered 2.2%.    Smaller banks also rebounded from the recent sell-off, with Fifth Third Bancorp (NASDAQ:FITB), PNC Financial Services Group (NYSE:PNC) and KeyCorp (NYSE:KEY) each gaining more than 4%.EMERGENCY LIQUIDITYEarlier in the day, Credit Suisse became the first major global bank to take up an emergency lifeline since the 2008 financial crisis as fears of contagion swept the banking sector and raised doubts over whether central banks will be able to sustain aggressive interest rate hikes to rein in inflation. Rapidly rising interest rates have made it harder for some businesses to pay back or service loans, increasing the chances of losses for lenders already worried about a recession.However, the European Central Bank raised interest rates by 50 basis points on Thursday as flagged, stressing the resilience of the euro area banking sector while assuring it had plenty of tools to offer liquidity support if needed.The U.S. Federal Reserve is expected to follow the ECB move at its next meeting with a quarter-point interest-rate hike that just days ago looked derailed by turmoil in the banking sector.Policymakers have tried emphasize that the current turmoil is different than the global financial crisis 15 years ago as banks are better capitalised and funds more easily available.But central bank data on Thursday also showed that banks sought record amounts of emergency liquidity from the Federal Reserve in recent days, driving up the size of the Fed’s balance sheet after months of contraction. “The numbers, as we see them right here, are more consistent with the idea that this is just an idiosyncratic issue at a handful of banks,” said Thomas Simons, money market economist with investment bank Jefferies.Yellen said the U.S. banking system remains sound thanks to “decisive and forceful” actions following the collapse of Silicon Valley Bank.Allianz (ETR:ALVG), one of Europe’s biggest financial firms, said authorities were “well equipped” to deal with any liquidity crisis, “unlike what happened during” the 2007-2008 financial crisis.BUYING TIMECredit Suisse, a bank with a 167-year history, became the biggest European name swept up in the turmoil after its largest investor said it could not provide more funds due to regulatory constraints. It said it would exercise an option to borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank, which confirmed it would provide liquidity to the bank against sufficient collateral. Credit Suisse shares closed 19% higher on Thursday, recovering some of their 25% fall on Wednesday. Since March 8, before last week’s collapse of SVB, European banks have lost around $165 billion in market value, Refinitiv data shows.The stock market value of Switzerland’s second-largest bank has fallen by 90% since its peak in February 2007 of around $91 billion, to around $8.66 billion following a prolonged slide in its shares.Analysts said the measures will buy time for Credit Suisse to carry out a planned restructuring and possibly take further steps to pare back the Swiss lender. GRAPHIC – Credit Suisse goes off piste https://www.reuters.com/graphics/CREDITSUISSEGP-STOCKS/akveqegdgvr/chart.png More

HONG KONG (Reuters) – China opposes the United States adding several Chinese firms to its trade blacklist, China’s commerce ministry said on Friday.China urges the United States to stop using any excuse to suppress Chinese firms, the ministry said in a statement posted on its website.The U.S. Commerce Department, which oversees export controls, recently added a unit of genetics company BGI Genomics Co Ltd to the export control list. It also added BGI Research and Forensic Genomics International, which belong to BGI Group, the parent of BGI Genomics Co Ltd. More

NEW YORK (Reuters) -Banks sought record amounts of emergency liquidity from the Federal Reserve over recent days in the wake of the failure of Silicon Valley Bank and Signature Bank (NASDAQ:SBNY), which in turn helped undo months of central bank efforts to shrink the size of its balance sheet, Fed data showed on Thursday. Banks took an all-time high $152.9 billion from the Fed’s traditional lender-of-last resort facility known as the discount window as of Wednesday, while also taking $11.9 billion in loans from the Fed’s newly created Bank Term Lending Program. The discount window jump crashed through the prior record of $112 billion in the fall of 2008, during the most acute phase of the financial crisis. Including more than $140 billion in other funding provided to the new bridge banks for Silicon Valley Bank and Signature Bank established by the Federal Deposit Insurance Corp, the central bank’s total balance sheet mushroomed by roughly $300 billion in the last week. That reverses a substantial portion of the balance sheet reduction accomplished since last summer.While the borrowing amounts were large, some analysts were nevertheless heartened by what they saw and said there was now less reason to fear events of recent days are rising to a level where they could crash the entire economy. “The numbers, as we see them right here, are more consistent with the idea that this is just an idiosyncratic issue at a handful of banks,” said Thomas Simons, money market economist with investment bank Jefferies. The government’s support efforts appear likely to work and the size of the numbers reported by the Fed Thursday suggest “it’s not like a huge system-wide problem,” he said. NEW TOOLSThe Fed’s bank lending facility was launched on Sunday amid highly unsettled markets, rattled by the failure of regional financial firm Silicon Valley Bank on Friday and then Signature over the weekend. The facility allows a range of banks and other eligible firms to borrow against Treasuries, mortgage back securities and other eligible collateral at face value, breaking from other Fed lending efforts that put penalties on the lending. Firms can do this for up to a year at a borrowing cost of the one-year overnight index swap rate plus 10 basis points. The bank lending facility is backstopped by $25 billion from the Treasury Department’s Exchange Stabilization Fund.Record discount window borrowing was somewhat unexpected as many analysts had thought banks would instead gravitate to the new lending facility. But there was also a question of timing, as firms may have first gone to the discount window as it was there when the troubles broke. Over time, that money could move from the discount window and over to the new facility, some speculated. That said, some saw the discount window borrowing surge as a positive by itself. The facility has long been shunned by eligible banks for fear that using it would signal to others in the market they were in trouble. The Fed has tried to dispel this stigma, to uncertain effect. Steven Kelly, senior research associate at the Yale Program on Financial Stability, said that Thursday’s numbers suggest to him that the extraordinary action of standing up a new facility may not have even needed to happen. Given the numbers released by the Fed, “what this tells me is how easily this could have been done through the discount window,” with the existing Fed toolkit, he said. BALANCE SHEET UPSWINGThe surge in emergency lending caused the Fed’s balance sheet to stop shrinking and grow notably larger. After peaking at just shy of $9 trillion last summer before the Fed began taking action to reduce its holdings of Treasury and mortgage-backed bonds, overall holdings had fallen to $8.39 trillion on March 8, before moving up to nearly $8.7 trillion on Wednesday, which is the highest since November. The renewed rise of the balance sheet at a time when the Fed is still likely to press forward with rate rises puts two key pillars of monetary policy in some level of conflict. “That’s a feature, not a bug,” said Derek Tang of forecasting firm LH Meyer. The Fed will be able to stay the course on inflation-fighting rate rises and a bigger balance sheet will allow it to also stay the current course on shedding bonds and avoid stopping altogether the balance sheet run down, he said. More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.Market sentiment can be pretty gloomy in a financial crisis. So when national authorities offer, approve or backstop gargantuan funding and rescue packages worth hundreds of billions of dollars, investors are entitled to get a little bit excited.Thursday’s remarkable risk-on rally reflects exactly that and barring any unforeseen events – a dangerous assumption in such febrile times, perhaps – Asia should round off a tumultuous week on a high note on Friday. Up to 11 U.S. banks, including giants JP Morgan Chase (NYSE:JPM), Morgan Stanley (NYSE:MS) and Citigroup (NYSE:C), will deposit up to $30 billion into stricken First Republic Bank (NYSE:FRC), sources familiar with the matter told Reuters.The package is backed by U.S. regulators, and media reports said JP Morgan boss Jamie Dimon met with Treasury Secretary Janet Yellen on Thursday to discuss it. This followed news late on Wednesday that Switzerland’s central bank will offer the even more stricken Credit Suisse up to $54 billion in loans to shore up liquidity. Not only did the Credit Suisse lifeline help calm markets, it gave cover for the European Central Bank (ECB) to deliver an inflation-fighting 50 basis point rate hike on Thursday. Raising rates during a banking crisis may come back to haunt the ECB – it wouldn’t be the first time – but then again, its new strategy of data dependency could also give it cover to reverse course in the coming months if it has to.What started as another grim-looking session on Thursday – safe-havens like the yen and Treasuries were riding high in early trade – culminated in a solid risk rally across the board.The yen slumped from its one-month high, the two-year U.S. Treasury yield ended the day 20 bps higher, U.S. regional banks had their biggest rise in four months, up 3.26%, and the Nasdaq jumped 2.5% for its best day in six weeks. Welcome relief for investors all round. But if previous banking crises have taught us anything, it is that they are never resolved in a matter of days, no matter how bold authorities’ action may be.Underlying the scale of fear that has permeated markets since the collapse of Silicon Valley Bank at the weekend, Fed data on Thursday showed that, as of Wednesday, banks took a record $152.9 billion from the Fed’s discount window this week.Together with its other emergency funding measures, the Fed’s balance sheet grew by $300 billion this week. Markets could be in yo-yo mode in the weeks ahead. But Friday, in Asia at least, looks like being an up day. Here are three key developments that could provide more direction to markets on Friday:- Japan tertiary activity index (January)- Malaysia trade (February)- Euro zone inflation (February) (By Jamie McGeever; editing by Josie Kao) More

WASHINGTON (Reuters) -The chair of a U.S. House of Representatives panel wants TikTok CEO Shou Zi Chew to address questions next week about the popular Chinese-owned video app’s efforts to protect children from inappropriate content and potential exploitation.Chew will be appearing for the first time before Congress when he testifies before the House Energy and Commerce Committee on March 23.Committee Chair Cathy McMorris Rodgers, a Republican, said Thursday lawmakers “need to know what actions the company is taking to keep our kids safe from online and offline harms.”McMorris Rodgers and other Republicans in December wrote TikTok saying said “many children are exposed to non-stop offerings of inappropriate content that TikTok’s algorithm force-feeds to them.” They also raised concerns that TikTok livestreamed events allow adult TikTok users to offer monetary rewards to “persuade children to perform sexually suggestive acts.”TikTok, owned by Chinese tech company ByteDance, said the Biden administration had threatened to ban the app in the United States if its Chinese owners did not sell their stakes in the company.”Americans deserve to know the extent to which their privacy is jeopardized and their data is manipulated by ByteDance-owned TikTok’s relationship with China,” she added. The U.S. government has raised concerns that TikTok’s user data could be passed on to China’s government.TikTok, which did not immediately comment, said earlier this month it is developing a tool that will allow parents to prevent their teens from viewing content containing certain words or hashtags on the short-form video app.TikTok announced new features to help users limit the amount of time spent on the app. Accounts belonging to users under 18 will automatically have a time limit of one hour per day, and teens will need to enter a passcode to continue using the app.TikTok and the Biden administration have been negotiating for more than two years on data security requirements. TikTok said it has spent more than $1.5 billion on rigorous data security efforts and rejects spying allegations.The Biden administration demand for divestiture was the most dramatic in a series of recent steps by U.S. officials and legislators. More