Closing post
Time to wrap up, after a day in which some confidence returned to the markets despite the recent turmoil in the banking sector.
Here are our main stories, first on the banks:
In the transport sector:
The cost of living crisis:
And in other news:
British Airways cancels 300 flights during Heathrow staff’s Easter strikes
British Airways is to cancel more than 300 flights to and from Heathrow over the Easter holiday period due to strikes by airport security staff.
The airline is axing about 5% of its schedule, with 16 return short-haul flights cancelled daily. It said the majority of affected customers would be booked on to alternative flights within 24 hours, or could be fully refunded.
Members of the Unite union voted to strike in a pay dispute with Heathrow, which has offered a 10% rise after years of pay freezes during Covid.
The staff on strike work in the security lanes in Terminal 5, used exclusively by British Airways, and in campus security, checking all cargo entering the airport. The strikes will take place between this Friday, 31 March, and Easter Sunday, 9 April.
European market close
The UK stock market has racked up decent gains today.
The FTSE 100 index has finished the day 0.9% higher at 7,471.77 points, a gain of 66 points today.
Markets benefitted from a modest easing in the angst in the banking sector, after last week’s selloff.
Michael Hewson of CMC Markets says:
Most sectors of the markets have seen a modest rebound, helped by events on the other side of the Atlantic as reports emerge that Citizens Bank in the US is acquiring Silicon Valley Bank’s loans and deposits.
We’re also seeing a rise in 2-year yields on both sides of the Atlantic as markets price out some of the more dire recession scenarios that were being priced at the end of last week, as markets take a breather in the wake of the turmoil seen at the end of last week.
In the crypto markets, Bitcoin has dropped 4% after the US Commodity Futures Trading Commission sued Binance founder and CEO Changpeng Zhao.
Binance is facing charges of breaching trading rules.
In a court filing in Chicago the Commission said Binance had failed to properly register with the regulator, a condition of allowing US customers to trade certain crypto assets such as derivatives. More here.
NOW: Bitcoin dropped following news of Binance and CEO CZ being sued by the US CFTC over regulatory violations https://t.co/9hQGbuGCNL pic.twitter.com/EyzKCCnkjW
— Bloomberg Crypto (@crypto) March 27, 2023
Updated
You know we’re not in normal times when banks feel the need to include nuclear attacks as a business threat.
Germany’s Commerzbank has added the danger of “a tactical nuclear attack on Frankfurt/Main”, which is Germany’s financial nerve centre and Commerzbank’s head office location, to the list of risks. in its annual report.
It now sits alongside other potential perils including the default of Germany, or another major advanced economy, the disintegration of the eurozone, or extreme cyberattacks.
Commerzbank has made a rather ominous addition to its risk report 😬
— Steven Arons (@StevenArons) March 27, 2023
greetings from Frankfurt!
[images are from risk section in 2021 and 2022 annual reports]https://t.co/lL4brTU56O pic.twitter.com/XjCBDVijjq
Updated
Could office blocks be the next big casualty of the banking crisis?
Higher interest rates and cuts in lending could pile pressure on commercial property sector, following the hit from hybrid working, my colleauge Julia Kollewe reports.
The new central London headquarters of the property company CBRE could easily be mistaken for a hotel, given its open lounges with comfy seating, potted plants, coffee and tech bars and library.
In the post-pandemic property world, phrases such as “hotelification” and “earning the commute” have become commonplace among executives trying to lure back workers used to working from home.
Many bosses accept hybrid working is here to stay. Some smaller businesses have abandoned permanent offices altogether.
But with higher borrowing costs, weaker levels of economic growth, and fewer people working in offices in town and city centres after the pandemic, investors fear a perfect storm is brewing in the property sector.
More here:
Equities Heatmap pic.twitter.com/reLi3ODb60
— Megawatt Intel (@megawatt_intel) March 27, 2023
Boom! Shares in First Citizens have surged by 45% in early trading to $847 each, as traders hail its move to take over all the deposits and loans of Silicon Valley Bank.
US stock market opens higher as banking panic ebbs
The US stock market has opened higher, as investors are cheered by First Citizen’s acquisition of Silicon Valley Bank’s deposits and loans.
The S&P 500 index has opened up 24 points, or 0.6%, at 3,995 points, while the Dow Jones industrial average gained 253 points or 0.8% to 32,490.
First Citizens’ move to take over most of SVB, announced early this morning, is calming nerves about stresses in the banking system.
It shows that authorities in the US can move quickly to deal with the fallout from the turbulence in the banking sector, as we saw last week with Credit Suisse.
Craig Erlam, senior market analyst at OANDA, says:
It’s been a relatively calm start to the week, with investors seemingly relieved that the weekend brought no fresh turmoil in the banking sector.
That was clearly the fear going into it on Friday, with Deutsche Bank being hit particularly hard amid concerns it could be next in the firing line even if the fundamentals didn’t necessarily back that up.
Anxiety is going to remain until we have a few weeks of calm and despite the small frenzy on Friday, I think we can say that the first of those is now behind us. That isn’t to say that I think the storm has passed, just that the panic of the last few weeks may subside and allow for a more rational market to re-emerge. Or perhaps I’m being too hopeful for a Monday.
The authorities were once again hard at work over the weekend trying to clean up the mess of the last few weeks. This weekend it was a large portion of SVB that was sold to First Citizens Bank, with the FDIC retaining the remaining securities and other assets.
Updated
The concerns swirling through the banking system are causing global credit conditions to tighten, rating agency S&P Global has warned today.
The issue is particular notable in Europe.
Reuters has the details:,
One of S&P’s top sovereign analysts made the comments during a roundtable with journalists. He added that central banks raising interest rates by more than expected remained the main risk for sovereign ratings.
He also said France’s planned pension reforms that have caused social unrest over the last week looked “sensible” considering the country’s demographics and could ulimately be beneficial for its credit rating.
Deutsche Bank continues to climb back from last Friday’s lows – its shares are now up 6.25% today at €9.07.
Deutsche Bank is up 14% from the low on Friday.
— Jens Nordvig 🇩🇰🇺🇸🇺🇦 (@jnordvig) March 27, 2023
No news on the way down.
No news on the way up.
Markets are a bit erratic in March 2023... pic.twitter.com/jr7MvcrvR7
Massive strike over pay in Germany hits transport
A massive strike is underway in Germany, causing disruption to mass transport and airports as unions demand pay rises to protect workers from inflation.
Trains, planes and public transit systems stood still across much of Germany today, as unions called a major one-day strike over salaries.
It’s one of the biggest walkouts in decades as Europe’s largest economy reels from soaring prices.
Union bosses warned that considerable pay hikes were a “matter of survival” for thousands of workers and management calling demands and the resulting action “completely excessive”.
The Verdi union is demanding a 10.5% wage increase. It negotiates on behalf of around 2.5 million employees in the public sector, including in public transport and at airports.
Frank Werneke, head of the Verdi labour union, told Bild am Sonntag.
“It is a matter of survival for many thousands of employees to get a considerable pay rise.”
Railway and transport union EVG, which represents around 230,000 employees at railway operator Deutsche Bahn (DBN.UL) and bus companies, is seeking a 12% raise.
Although markets are recovering today, there is still anxiety about the economic damage caused by jitters over the banking sector.
Yesterday, Minneapolis Fed President Neel Kashkari warned that the recent turmoil has brought the US closer to a recession.
In a CBS “Face The Nation” interview, Kashkari insisted that the US banking system is resilient and sound, but cautioned:
“What’s unclear for us is how much of these banking stresses are leading to a widespread credit crunch. And then that credit crunch, just as you said, would then slow down the economy.
This is something we are monitoring very, very closely.
Now, on one hand, such strains could then bring down inflation. So we have to do less work with the federal funds rate to bring the economy into balance. But right now, it’s unclear how much of an imprint these banking stresses are going to have on the economy. But it’s something to watch very carefully. And that’s what we’re focused on.
Kashkari added that Fed officials are monitoring the impact from the fallout of the banking sector “very, very closely,” and the current system has the “full support” of the Federal Reserve.
He said:
“The banking system has a strong capital position and a lot of liquidity and has the full support of the Federal Reserve and other regulators standing behind it.”
Fed's Kashkari says stress in banking sector brings the U.S. closer to recession https://t.co/hYkkRMPsTV
— CNBC (@CNBC) March 27, 2023
Shares of major US banks are also set to rally when the New York stock exchange opens in under two hours.
JP Morgan and Goldman Sachs are both up 1.7% in premarket trading, while Bank of America has gained 2.1%.
That’s an encouraging sign for the week ahead, as traders had been on the lookout for any other potential pockets of trouble in the global financial system.
Shares in Deutsche Bank are continuing to rally.
They’re currently up 4.65%, as financial analysts continue to give the German lender a vote of confidence after its slide at the end of last week.
“Deutsche Bank is not the ‘weak link’ in the European banking landscape,” Kepler Cheuvreux analyst Nicolas Payen wrote in a note, flagging that the lender had “very solid” fundamentals.
On Friday, JP Morgan blamed “one-way derisking trades” for the jump in the cost of insuring Deutsche Bank’s debt against default. Its analysts pointed out that Deutsche has strong capital and liquidity ratios, and was profitable last year.
A vote of confidence in @DeutscheBank pic.twitter.com/NwtdAWXdLZ
— Luke Baker (@BakerLuke) March 27, 2023
Jack Ma returns to China
The Alibaba founder, Jack Ma, has visited a school in mainland China after months during which he made no public appearances in the country because of a government crackdown on the powerful tech sector.
He is thought to have remained outside China for more than a year from late 2021 after regulators in the country tightened oversight of his businesses due to outspoken criticism from the tech entrepreneur.
Ma visited Yungu school in the eastern Chinese city of Hangzhou, where Alibaba is headquartered. A social media post contained pictures and video of Ma touring the school, which is funded by Alibaba.
The billionaire had been one of China’s most prominent business figures, but he faced a stern rebuke from China’s authoritarian rulers after criticising regulators and the banking industry shortly before the planned blockbuster stock market flotation of the fintech group Ant Financial.
China blocked the float shortly after the speech, in a move that was widely interpreted by analysts as retaliation for his comments.
Shares in North Carolina lender First Citizens are up over 25% in premarket trading, after it secured a deal to take over most of Silicon Valley Bank.
Wall Street is clearly impressed that First Citizens are taking on all of SVB’s $119bn of deposits and loans.
Here’s the full story:
UK retailers also need more help to address skill shortages in the sector, the CBI adds.
Martin Sartorius, CBI principal economist, warns that Jeremy Hunt’s expansion of state support for childcare costs was welcome, but not sufficient:
“The Chancellor’s decision to back CBI calls to increase support for occupational health and expand childcare provision will help address some of the labour shortages that retailers are currently facing.
However, these measures alone do not go far enough for the sector. In particular, more will need to be done to tackle retailers’ ongoing skills gaps, such as through transforming the Apprenticeship Levy into a more flexible Skills Challenge Fund.”
The CBI’s distributive trades survey of UK retailing also found that internet sales continued to fall at a firm pace in the year to March.
Retailers expect a modest expansion in internet sales next month, though.
Pound higher as calm returns to markets
The pound has inched higher this morning, as a sense of calm returns to global markets today.
Sterling has gained a quarter of a cent against the US dollar, to $1.2255. Against the euro, it’s up 0.2% at €1.1389.
Relief that the turmoil in the banking sector has calmed, and optimism about the economic outlook, are lifting markets, says Marios Hadjikyriacos, senior investment analyst at XM.
Hadjikyriacos explains
Renewed concerns around the durability of the banking system plagued trading on Friday, with bank shares in Europe getting battered as fears of contagion spread.
Yet, the mood improved once the latest US business surveys rolled out. These surveys painted a brighter picture of economic conditions, praising the resilience of demand in the services sector and highlighting a reacceleration in inflationary pressures. Similarly, business leaders did not appear particularly concerned about the impact of the banking episode on their operations.
This was the catalyst for a miraculous comeback in stock markets, with the S&P 500 erasing some heavy losses to close higher by 0.5% in the end. Futures point to further gains when Wall Street opens on Monday, likely reflecting some relief that no other banks collapsed this weekend.
Beyond the absence of escalation, the news flow around banks has started to improve too. Investors were greeted on Monday with headlines that First Citizens Bank will absorb the deposits and loans of failed Silicon Valley Bank, signaling that regulators are working round the clock to prevent any further spillovers.
European stock markets continue to rally, with the FTSE 100 index currently up 64 points or 0.87%.
Oil has risen this morning too, with Brent crude gaining 1% to $75.74 per barrel.
Updated
UK retailers turn positive on sales hopes
After a tough winter, UK retailers are hoping for a pick-up in sales next month.
The CBI’s monthly gauge of the retail sector, just released, shows that retailers have the first positive sales expectations since last September.
Its expected sales balance increased to +9 for April, up from -18 in March. That ends a run of negative sales expectations since last October.
Sales in March were reported roughly flat at +1, little changed from February’s reading of +2, as the cost of living squeeze continues to hit consumer spending.
Retail sales volumes were broadly unchanged in the year to March, according to the latest CBI #DTS. Retailers expect sales to grow at a moderate pace next month pic.twitter.com/g1Fof7ajw3
— CBI Economics (@CBI_Economics) March 27, 2023
CBI principal economist Martin Sartorius says it is “encouraging” that activity in the retail sector seems to be stabilising, after “a challenging winter”, adding:
“This resilience has helped inspire some spring shoots of optimism, with firms expecting an increase in sales for the first time since last September.”
Retail sales in March were judged to be good for the time of year, and are expected to continue to exceed seasonal norms next month #DTS pic.twitter.com/KyZLpupCIL
— CBI Economics (@CBI_Economics) March 27, 2023
Retailers considered stock volumes in March to be elevated relative to expected sales, and to a broadly similar extent as last month. Stock positions are expected to ease slightly next month but remain “too high” #DTS pic.twitter.com/gtnE8c8yda
— CBI Economics (@CBI_Economics) March 27, 2023
Orders placed upon suppliers were broadly unchanged in the year to March, and are expected to remain unchanged next month #DTS pic.twitter.com/dHlmrFcDe0
— CBI Economics (@CBI_Economics) March 27, 2023
The cost of insuring European bank bonds against default has fallen a little today, another sign that calm is returning to the markets.
European bank CDS steady/slightly tighter this morning
— Chris Whittall (@Chris_Whittall) March 27, 2023
Deutsche Bank 5yr @ 191bp (-7), Barclays @ 146bp (-), UBS @ 132p (-3) pic.twitter.com/ZitOgjpDJL
Good morning
— Mohamed A. El-Erian (@elerianm) March 27, 2023
Nice to have a weekend without emergency bank announcements
Having said that, it's too early to declare the "All Clear." That will only happen when the more fragile #banks' CDS and bond spreads calm down
Per below from Friday for @DeutscheBank
, some remain too high pic.twitter.com/dxPkLXTeeC
Updated
First Republic shares up 25% in pre-market trading
US regional bank First Republic is rallying sharply in pre-market trading, amid hopes of more help from the authorities.
Shares in First Republic have jumped 25% before the Wall Street opening bell, following a report that an emergency lending facility for US banks could be expanded. That could give First Republic more time to shore up its balance sheet.
Earlier this month, major Wall Street banks pledged to put $30bn of deposits into First Republic, but that has not stemmed concerns over the bank, which has many wealthy customers.
Bloomberg has the details of the latest potential support:
Officials have yet to decide on what support they could provide First Republic, if any, and an expansion of the Federal Reserve’s offering is one of several options being weighed at this early stage. Regulators continue to grapple with two other failed lenders — Silicon Valley Bank and Signature Bank — that require more immediate attention.
Even short of that step, watchdogs see First Republic as stable enough to operate without any immediate intervention as the company and its advisers try to work out a deal to shore up its balance sheet, the people said, asking not to be named discussing confidential talks.
More here: US Mulls More Support for Banks While Giving First Republic Time
After two hours trading, European markets remain calm although shares have dipped back from their earlier highs.
The UK’s FTSE 100 index is now up 44 points, or 0.6%, at 7449 points.
Mining giants are dragging the London market down, as the fall in China’s industrial profits (see 8.33am BST) could mean weaker demand for commodities.
The lack of any negative macro development over the weekend are helping to ease investors’ worries., says Pierre Veyret, technical analyst at ActivTrades, adding:
However, markets remain volatile everywhere on the old continent, with the risk-off trading stance still alive, as highlighted by lower bonds and a higher EUR currency.
Investor are bracing for another intense week ahead with a busy agenda on the macro front including speeches from several Fed officials, the crucial US CPI print, rising geopolitical tensions with Russia while a close attention is likely to be maintained towards the financial sector.
Veyret predicts that market sentiment will strengthen this week, as efforts by central banks to ensure market stability through monetary support should start to lift risk appetite.
Updated
Although the likelihood of a recession has fallen, UK growth is expected to be negative in 2023, new analysis from KPMG shows.
They warn that the outlook for businesses remains “mixed”, and that Jeremy Hunt’s new measures to boost business investment are likely to have only a temporary effect on UK growth.
In better news, inflation is expected to fall sharply this year as supply chain pressures ease.
Yael Selfin, chief economist at KPMG UK, warns that concerns over the banking sector could also hit the economy:
“Despite slightly stronger near-term momentum and the boost from the recent Budget announcements, ongoing tensions in the banking system and the lingering risk of a recession put a question mark around the outlook for the UK. The good news is that base interest rates have probably already reached their peak.
“Looking ahead, as the economy cools and inflation returns back to target, this may provide the Bank of England with an opportunity for a series of gradual rate cuts next year. Nonetheless, structural issues, including skills shortages, slowing workforce participation, and ageing population, dominate the longer‑term risks to the UK outlook.”
Eurozone lending slows
Bank lending across the eurozone has slowed – a sign that the economic slowdown and higher interest rates are hitting demand.
New figures from the European Central Bank shows that lending to eurozone companies slowed for the fourth straight month in February. It rose at an annual rate of 5.7%, down from 6.1% in January.
Lending to households also slowed, to 3.2% per year from 3.6% in January.
This shows that credit growth was weakening even before the current banking turmoil, which may further deter lending.
How did euro area bank lending and money supply evolve in February? How do they compare with January’s figures? Find out more in the press release https://t.co/H0A7twdrsl pic.twitter.com/226wqpBAcT
— European Central Bank (@ecb) March 27, 2023
Here’s some analysis of the data, from Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management:
🇪🇺 Euro area money supply growth is declining faster than expected (*before* the recent events).
— Frederik Ducrozet (@fwred) March 27, 2023
M1 growth, including currency and overnight deposits, contracted by a record 2.7% in February.
Credit growth remained weak overall. 🧵 pic.twitter.com/QqGlFZZJBa
In real terms, M1 growth is now down 10% YoY, consistent with a collapse in economic growth. 😱
— Frederik Ducrozet (@fwred) March 27, 2023
Now given the starting point for monetary policy and money supply, the old relationships may not hold. A key focus should be on the asset side of the banks' balance sheet. pic.twitter.com/fONvjOvoxf
Bank credit remained weak in February, down for loans to households and stabilising for loans to corporates. That was before the recent events, and the direction of travel looks clear. Question is much banks will tighten eventually (Bank Lending Survey out on 2 May will be key). pic.twitter.com/5W58GXI8iD
— Frederik Ducrozet (@fwred) March 27, 2023
Full picture for euro area bank loans to non-financial corporations: down in February (-€2bn adjusted for sales and securitisation), for the fourth month in a row. pic.twitter.com/Fr72etW5EE
— Frederik Ducrozet (@fwred) March 27, 2023
The contraction in bank loans to corporates could have been larger if it hadn't been for a rebound in smaller countries. pic.twitter.com/s6qBhVMmZp
— Frederik Ducrozet (@fwred) March 27, 2023
German business confidence rises unexpectedly
Happy news: German business morale has risen unexpectedly this month.
The Ifo institute said its business climate index stood at 93.3 following a reading of 91.1 in February; analysts polled by Reuters had predicted a reading of 91.0.
It’s a sign that Europe’s largest economy is recovering despite the energy crisis and high inflation, although the recent banking sector turmoil could yet dent morale.
🇩🇪 Sentiment rose for the fifth month in a row according to the IFO survey. We'll probably something similar in Sweden when data will be released later this week. Note, however, that those surveys were largely carried out before the financial turmoil started. pic.twitter.com/vZ5w4Ro6oy
— Andreas Wallström (@anwallstrom) March 27, 2023
⚠️ IFO ECONOMIST: WINTER RECESSION IN GERMANY HAS BECOME MORE UNLIKELY
— PiQ (@PriapusIQ) March 27, 2023
Updated
German government bond yields are rising this morning as fears about the banking turmoil ease.
Bond yields rise when prices fall. This morning, Germany’s 2-year bond yield, which is highly sensitive to changes in interest rate expectations, was last up 11 basis points (bps) to 2.489%.
German short-term bond yields fell through March, amid worries that the banking crisis would hit global growth.
But the mood is brighter today, helped by First Citizens buying all the loans and deposits of Silicon Valley Bank (see 8.25am post).
Richard McGuire, head of rates strategy at Rabobank, explains (via Reuters)
“It’s just the ebb and flow of banking related concerns as the market tries to determine how concerned it should be as regards the recent stresses.”
IG: Steady drain of deposits from banks creates a slow motion problem
Markets have opened calmly this morning, and it looks like Friday’s panic over Deutsche Bank was a bit misplaced, says Chris Beauchamp, chief market analyst at IG Group.
But, he warns that a ‘slow motion’ problem is building:
The steady drain of deposits from banks means a slow motion problem is in the making, and could result in a contraction in lending that brings on a recession.
This is the bigger risk than the hunt last week for the next domino to fall in the global banking system.
Data overnight has shown that profits at industrial firms in China have tumbled in the first two months of the year, as factories struggle to recover from the Covid-induced slump.
Industrial profits fell by 22.9% in January and February, compared with a year ago.
nalysts blamed lacklustre demand and persistent high costs, as the world’s second-largest economy struggled to emerge from its long lockdown.
Chinese industrial profits (of firms above a designated size) declined 22.9% yoy for Jan+Feb. pic.twitter.com/Y1IQCtDBTQ
— ChinaCharts (@RealChinaCharts) March 27, 2023
First Citizens to buy failed Silicon Valley Bank
Silicon Valley Bank, the regional lender whose collapse sparked the banking crisis this month, is being largely acquired by First Citizens Bank.
First Citizens Bank is buying Silicon Valley Bank’s loans and deposits from the Federal Deposit Insurance Corporation (FDIC) and will operate its 17 branches, US regulators announced today.
They estimate the lender’s collapse would lead to $20bn (£16.3bn) of losses for a deposit insurance fund paid for by banks.
Victoria Scholar, head of investment at interactive investor, explains:
Around $119 billion of SVB’s deposits and $72 billion of assets will be taken on by First Citizens Bank while $90 billion of assets will remain with the FDIC, costing the insurance fund around $20 billion. First Citizens has a history of acquiring embattled lenders in FDIC supported deals.
SVB’s losses on its bond portfolio losses and the acceleration of customer withdrawals prompted jitters across the sector. Since its collapse on 10th March, the banking sector has been under pressure, exacerbated by the turmoil at Credit Suisse which was salvaged in a rescue deal from UBS. This has sparked contagion fears with shares in Deutsche Bank tumbling as much as 14% at one stage during Friday’s session amid nervousness about its exposure to commercial property and derivatives, sending the cost of insuring against its bonds sharply higher.
The placatory deal for SVB has helped to calm market skittishness after the recent sthenic price action, Scholar adds:
Banks are outperforming at the European open with Deutsche Bank up by more than 6.5% and Credit Suisse up by over 2.5%. Commerzbank, Société General and BNP Paribas are also bouncing on Monday.
Updated
Asia-Pacific markets were calmer today, with Japan’s Nikkei gaining 0.33%, Australia’s S&P/ASX flat, but Hong Kong’s Hang Seng down 0.9%.
“So far, it’s been comparatively calm in markets to start the week,” reports Stephen Innes, managing partner at SPI Asset Management.
As Innes explains, some banks have been caught out by the fall in bond prices, which means they face taking a loss if they have to sell those bonds due to customer withdrawals (as occured with Silicon Valley Bank):
Investors better understand the problems facing American banks today are not remotely similar to the subprime mortgage crisis when underwater borrowers defaulted on loans en masse.
Instead, banks are warehousing long-duration high-quality paper but fund the book at higher short-term rates; hence they are bleeding profits on mismatched interest rate positions.
UK banks open higher
European stock markets have shaken off last week’s worries, rallying at the start of trading.
The UK’s FTSE 100 index has jumped by 79 points, or 1%, to 7485, recovering most of Friday’s losses.
Bank shares are among the leading risers, with Barclays rallying 3.5%, Standard Chartered gaining 2% and NatWest and Lloyds Banking Group both up 1.8%.
Across the channel, France’s CAC 40 is up 1.3%, while Spain’s IBEX is up 1.4% and Germany’s DAX is up 1.3%.
Saudi National Bank chair resigns after Credit Suisse comments
Newsflash: the chair of Saudi National Bank has resigned, just days after helping to spark a slump in the Swiss lender’s shares.
Ammar Al Khudairy, the chairman of Credit Suisse’s largest shareholder, is stepping down “for personal reasons”, SNB said this morning.
He will be replaced by chief executive officer Saeed Mohammed Al Ghamdi
Al Khudairy hit the headlines this month, when he revealed that SNB, which owns a near-10% share of Credit Suisse, would not increase its stake.
Those comments appeared to send the Swiss bank’s shares tumbling, leading to its forced merger by UBS a few days later.
BREAKING: The chairman of Saudi National Bank — Credit Suisse's largest shareholder — resigns after his comments helped spark a slump in the Swiss lender https://t.co/F927vIrS6o pic.twitter.com/S2v7UOBDJ8
— Bloomberg Middle East (@middleeast) March 27, 2023
Saudi National Bank confirmed to CNBC last week that it had been hit with a loss of around 80% on its investment in Credit Suisse.
Deutsche Bank is expect to recover some of Friday’s losses today.
Deutsche Bank’s shares are up 4.2% in pre-market trading, after ending last week sharply lower.
Seems oddly calm this morning, but looking back it does seem like last week's panic over Deutsche Bank was a bit overdone...
— Chris Beauchamp (@ChrisB_IG) March 27, 2023
Analysts did struggle to explain last Friday’s selloff, with Citigroup suggesting it may be down to an “irrational market.”
Introduction: Markets to rally despite financial stability fears
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Risks to financial stability have increased, with the uncertainties in the world economy remained “exceptionally high”, the head of the International Monetary Fund has warned.
Speaking at a conference in Beijing last weekend, Kristalina Georgieva urged vigilance following the recent banking sector turmoil in advanced economies.
Georgieva cited the events in the banking sector, telling the annual China Development Forum that:
“At a time of higher debt levels, the rapid transition from a prolonged period of low interest rates to much higher rates – necessary to fight inflation – inevitably generates stresses and vulnerabilities, as evidenced by recent developments in the banking sector in some advanced economies.
Her comments came after several volatile weeks in the financial sector, which saw the failure of Silicon Valley Bank and the rescue of Credit Suisse by UBS.
Georgieva noted that policymakers have acting decisively, adding:
“These actions have eased market stresses to some extent but uncertainty is high and that underscores the need for vigilance.”
Banking sector jitters spread to Deutsche Bank last week, when shares in the German bank slipped and the cost of insuring its debt rose.
But, the selloff seemed to be triggered by a lack of confidence, rather than a specific problem at Deutsche.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:
Despite the bank stress on both sides of the Atlantic, both, the Federal Reserve (Fed), the European Central Bank (ECB), the Bank of England (BoE) and the Swiss National Bank (SNB) haven’t refrained from hiking the interest rates over the past two weeks, weighing – not necessarily on the health of the banks’ balance sheets, but on worries regarding the health of the banks’ balance sheets.
Today, it appears that the banking crisis is more of a confidence crisis than a fact-based panic – as it was the case in 2007 when banks really had a bunch of toxic assets in their balance sheets.
But confidence is the bread and butter of the banking sector. And watching the 166-year-old Credit Suisse go under did no good to anyone last Monday.
But the markets do look calmer this morning, with the main European indices being called up almost 1% in pre-market trading.
European Opening Calls:#FTSE 7457 +0.69%#DAX 15093 +0.91%#CAC 7067 +0.74%#AEX 738 +0.90%#MIB 26136 +0.94%#IBEX 8871 +0.90%#OMX 2108 +0.98%#SMI 10716 +0.77%#STOXX 4167 +0.89%#IGOpeningCall
— IGSquawk (@IGSquawk) March 27, 2023
The agenda
9am BST: Ifo index of Germany’s business climate for March
1aam BST: CBI distributive trades survey of UK retail for March
3.30pm BST: The Dallas Fed manufacturing index for March
6pm BST: Bank of England governor Andrew Bailey speaks at the LSE
