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The hedge funds said they can share ideas, but cannot reveal their trading positions for regulatory reasons. Reddy said he preferred senior unsecured bank debt, that allowed bondholders payment ahead of some other creditors in the event of an insolvency. Taking bearish positions on banks that lend to smaller and medium sized firms could prove opportunistic if the economy weakens, he added. Trend-wise the Japanese yen should continue to weaken," said Chua, noting that central banks in Asia have slowed or paused rate hikes. Insurers, which holds commercial mortgage-backed securities and property, will likely feel pressures on CRE, he said.

☆ Factbox: Fed, FDIC reviews of US bank failures to spotlight problems, fixes
▼ + stars: | 2023-04-27 | by ( ) www.reuters.com time to read: +6 min

On Friday the banks' regulators - the Federal Reserve and the Federal Deposit Insurance Corporation - will publish their accounts of what happened at both institutions, and propose fixes to prevent a repeat. The FDIC will also publish a separate report on deposit insurance by Monday. Barr has said the Fed's report will include confidential supervisory information, including citations and exam material not typically disclosed. DEPOSIT INSURANCEThe second FDIC report could provide insight into how officials are thinking about the role of deposit insurance, currently capped at $250,000 per depositor, in financial stability. "The most interesting thing I expect to see is what the FDIC recommends about the deposit insurance cap," Phillips said.

☆ Here’s what the SVB report will (and won’t) include, according to top former Fed official
▼ + stars: | 2023-04-27 | by ( Elisabeth Buchwald | ) edition.cnn.com time to read: +5 min

Randal Quarles, former vice chair of supervision at the Fed, told CNN in an exclusive interview that he doesn’t expect the report to uncover any smoking guns. For instance, SVB was able to opt out of holding capital against its unrealized investment losses. Cole Burston/Bloomberg/Getty ImagesIn Quarles’ view, returning to the pre-2019 requirements “would not have made any difference” in preventing SVB from failing. The real issue that the Fed’s report should address, he said, is why SVB’s uninsured depositors were so quick to flee. That’s why Quarles said he didn’t hear about the red flags Fed officials identified when he was vice chair for supervision.

☆ Credit Suisse mess leaves scattered Swiss debris
▼ + stars: | 2023-04-24 | by ( Lisa Jucca | ) www.reuters.com time to read: +7 min

ZURICH, April 24 (Reuters Breakingviews) - Swiss government intervention to save Credit Suisse (CSGN.S) from collapse last month may have avoided a financial market storm. SWISS “TRINITY” QUESTIONThe rescue of Credit Suisse has other consequences. The Swiss Bankers Association has called for an independent inquiry, and lawmakers gave a symbolic thumbs-down to the rescue of Credit Suisse on April 12. A Senate Finance Committee report found last month Credit Suisse had violated a 2014 deferred prosecution agreement with U.S. authorities by continuing to help rich Americans dodge taxes. Switzerland’s parliament on April 12 rejected a Credit Suisse rescue package that included 109 billion Swiss francs in financial guarantees.

☆ ECB told not to take banks' word for it when assessing risk
▼ + stars: | 2023-04-17 | by ( ) www.reuters.com time to read: +2 min

FRANKFURT, April 17 (Reuters) - The European Central Bank should stop relying on banks' self-assessments when setting capital requirements and do its own homework instead, independent experts said on Monday. It was the most notable recommendation in a report commissioned by the ECB to evaluate its work on the key task as the euro zone's top financial supervisor, namely to decide how much capital banks must have to absorb losses. The ECB has been blending its analysis with the banks' own to come up with capital requirements. They told the ECB to change the way it sets capital demands and focus "on specific risks requiring additional capital coverage, while significantly limiting the use of ICAAPs". Fellow ECB supervisor Elizabeth McCaul welcomed a recommendation to use more "qualitative measures" with banks, which she said could include "limitations on business activity, demanding changes in the board and management, and monetary sanctions".

☆ BoE's Bailey says bank reforms worked but questions about liquidity buffers
▼ + stars: | 2023-04-12 | by ( Huw Jones | ) www.reuters.com time to read: +4 min

"Today I do not believe we face a systemic banking crisis. Bailey, however, echoed calls from his predecessor Mark Carney by saying there might be questions over the size of liquidity buffers required of banks in order to tide them over short-term shocks. This must beg the question of what are appropriate and desired liquidity buffers that create the time needed to take action to solve the problem." Data from the European Central Bank on Wednesday showed a slight weakening in liquidity buffers at banks it regulates, though they are still well above minimum requirements. Banks' holdings of liquidity have more than doubled since the global financial crisis, helping to contain fallout from the recent banking turmoil, de Cos said.

Earnings per share for the six biggest U.S. banks are expected to be down about 10% from a year earlier, analyst estimates from Refinitiv I/B/E/S show. The bank is expected to report a 30% rise in EPS, buoyed by an almost 36% increase in net interest income, according the Refinitiv I/B/E/S estimates and Reuters calculations. "We expect a challenging earnings season for the banks," said David Chiaverini, banking analyst at Wedbush Securities, in a note. He said bank managements will become more defensive, implementing liquidity measures that could lead to downward revisions for net interest income. Net interest income for the six biggest U.S. banks are expected to be up about 30% from a year earlier, according to analyst estimates from Refinitiv I/B/E/S.

☆ Britain's banks urge Bank of England to keep small company capital rule
▼ + stars: | 2023-04-03 | by ( Huw Jones | ) www.reuters.com time to read: +2 min

LONDON, April 3 (Reuters) - Forcing banks to set aside more capital in case loans to small and medium-sized companies turn sour would hit Britain's economy, banking industry body UK Finance said on Monday. It has proposed ending the preferential capital treatment for loans to small businesses, known as the SME supporting factor. "The SME support factor should not be completely and suddenly removed," UK Finance said in a statement. Britain should bring the floor into line with other countries to avoid a competitive disadvantage, UK Finance said. The BoE plans a simpler capital regime for smaller UK lenders, and UK Finance said the central bank should apply it to subsidiaries of foreign lenders operating in Britain as well.

[1/2] The Credit Suisse logo is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 16, 2023. Credit Suisse AT1 bondholders get nothing under the UBS merger deal. A WisdomTree exchange traded fund that tracks a broad index of bank AT1s, has dropped 11% in the past fortnight. Credit Suisse AT1s made up less than 3% of the fund just before the Swiss bank's rescue, the asset manager disclosed. Deutsche Bank AT1 debt is trading at 74 cents on the dollar, off last week's lows around 67 cents but still below levels seen before the Credit Suisse writedown, Tradeweb data shows.

Updating liquidity stress tests to take into account high-speed digital withdrawals, and the ability of social media to spread information among depositors at a much faster pace than ever before. Increasing the frequency of stress tests for mid-sized banks. Several of the proposals the White House endorsed are already under consideration, according to bank regulators who testified this week before two congressional committees. Among these are stricter rules for measuring liquidity in mid-sized banks, those with over $100 billion in combined assets, but under $250 billion. On Wednesday, group of Democratic senators, led by financial regulatory hawk Sen. Elizabeth Warren, D-Mass., sent a letter to bank regulators demanding stronger bank capital requirements.

☆ Yellen says US bank rules may be too loose, need to be re-examined
▼ + stars: | 2023-03-30 | by ( David Lawder | ) www.reuters.com time to read: +5 min

REUTERS/Mary F. CalvertWASHINGTON, March 30 (Reuters) - U.S. Treasury Secretary Janet Yellen said on Thursday that banking regulation and supervisory rules need to be re-examined in the wake of the Silicon Valley Bank (SIVB.O) and Signature Bank (SBNY.O) failures to ensure current banking system risks are addressed. Yellen said a 2018 roll-back of bank capital requirements and stronger supervision for smaller and mid-size banks with assets below $250 billion should be re-examined. She added that regulatory reforms put in place after the 2008 financial crisis have helped the U.S. financial system weather shocks, including the COVID-19 pandemic. adding that the financial system was significantly stronger than it was 15 years ago. The multi-regulator Financial Stability Oversight Council's restored Hedge Fund Working Group will continue to monitor risks and develop policy recommendations, Yellen said.

☆ Senate Democrats led by Elizabeth Warren press federal bank regulators to implement stronger capital requirements
▼ + stars: | 2023-03-30 | by ( Chelsey Cox | ) www.cnbc.com time to read: +4 min

WASHINGTON — Senate Democrats are pressing federal banking regulators to toughen bank capital requirements following back-to-back congressional hearings where officials testified about the failures of Silicon Valley Bank and Signature Bank. "We write to urge you follow through with establishing strong capital requirements that protect consumers and taxpayers, and preserve the safety and soundness of our banking system," Warren, along with Sens. Under the "stress capital buffer" implemented at the time, the capital requirements for banking firms is determined annually according to supervisory stress tests. The lawmakers urged regulators to enforce strong capital requirements to fend off aggressive lobbying from Wall Street and safeguard against more bank failures. "In order to prevent future bank crises and protect working Americans, I urge your agencies to quickly implement strong capital requirements and resist industry pressure to weaken or delay these requirements."

☆ White House prepares new bank rule proposal after failures - source
▼ + stars: | 2023-03-29 | by ( ) www.reuters.com time to read: +1 min

WASHINGTON, March 29 (Reuters) - The White House is preparing to release more of its promised plans to strengthen U.S. bank oversight as soon as this week after Silicon Valley Bank's collapse of earlier this month, according to a person familiar with the preparations. The White House declined to comment. The measures, which are still being hatched, are likely to fall short of broad changes to existing law. The White House is skeptical that such measures can win passage in a closely divided Congress. Instead, they would require implementing by the Fed, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency.

A capital increase was among proposals the World Bank made in January. It would not be possible without the support of the United States, the World Bank's dominant shareholder. "We are not requesting a capital increase," Yellen said during a budget hearing of the U.S. House of Representatives Appropriations Subcommittee on State, Foreign Operations, and Related Programs. "We do want to see better mobilization of private resources alongside World Bank investments as well, but we're not requesting a capital increase at this time." Yellen has previously called for the World Bank to take "bolder and more imaginative" steps to unlock more lending for climate change.

Cramer has dealt with a huge number of pitch decks in her time as an entrepreneur and VC. She has shared on LinkedIn her top tips for creating a successful pitch deck. "If you want to build a brand, your pitch deck needs to highlight that brand. If you want to build a tool, you need a pitch deck that shows mock-ups of the product," Cramer wrote. It allows senders much more control over who reads their pitch deck — and who can forward it.

A supervisory source told Reuters that redeeming AT1 bonds is a good way to instil confidence in markets if banks have enough capital, which the source said is the case for UniCredit. AT1 bonds are the riskiest type of debt banks can issue, ranking immediately after equity in the event of losses. The decision has disrupted the $275 billion AT1 bond market, which had already seen yields rise in the wake of recent U.S. banking failures. European rules require lenders to put in a request to supervisors to call an AT1 bond at least three months before the due date. AT1 bonds emerged in the wake of the global financial crisis as a way to build up bank capital and absorb losses.

☆ European banks face renewed selling pressure
▼ + stars: | 2023-03-24 | by ( ) www.reuters.com time to read: +8 min

So people are acting with their feet and continuing to sell bank stocks. ING ECONOMICS TEAM (emailed) "Most European banks are impacted by these events mainly via the more cautious market sentiment. "It seems like post what happened to Credit Suisse last weekend, two things might be at play here. “European banks probably suffered from contagion from what was going on in the US, where the regional banks seem to be under pressure in the rising rate environment. European banks have, in fact, had no fundamental issues whatsoever.

LONDON, March 23 (Reuters) - Credit Suisse (CSGN.S) bondholders are seeking legal advice after the Swiss regulator ordered 16 billion Swiss francs ($17.5 billion) of Additional Tier-1 (AT1) debt to be wiped out under its rescue takeover by UBS (UBSG.S). Not only did bondholders expect protection, but UBS is paying $3.23 billion to Credit Suisse shareholders. One Paris-based manager of a debt fund that held Credit Suisse AT1s said he had been "spammed" with emails from lawyers. Facing any challenge could be Credit Suisse, its new owner UBS, Swiss regulator FINMA or the Swiss government. It also cited an emergency March 19 ordinance which it said authorised FINMA to instruct Credit Suisse to write off the bonds.

☆ Credit Suisse Write-Off Upends European Bank Capital Bonds
▼ + stars: | 2023-03-22 | by ( Josh Mitchell | Anna Hirtenstein | ) www.wsj.com time to read: 1 min

Some $17 billion of riskier Credit Suisse bonds were written down to zero as part of its emergency takeover. Switzerland’s move to wipe out $17 billion of Credit Suisse Group AG bonds has prompted investors to reassess a market integral to the safety and resilience of Europe’s banking system. The Credit Suisse bonds that were written down as part of its takeover by UBS Group AG were known as AT1s, or Additional Tier 1 bonds. These instruments exploded in popularity in Europe over the past decade and were seen as a way to build buffers that could protect banks in times of trouble without having to tap taxpayer funds.

☆ Op-ed: ESG investing and 2018 change in bank laws didn't cause Silicon Valley Bank to collapse, says former Sen. Heitkamp
▼ + stars: | 2023-03-21 | by ( Heidi Heitkamp | Former Democratic U.S. Senator North Dakota | ) www.cnbc.com time to read: +6 min

Within hours of the Silicon Valley Bank collapse, political spin machines on both the left and right got cranking. I was one of the Democrats on the Senate Banking Committee who negotiated that legislation, which granted regulatory relief to small community and mid-sized regional banks. Under the burden of increased regulation, smaller institutions and many regional banks were struggling to stay competitive. If all the bank depositors withdrew their deposits on the same day, any bank would fail regardless of liquidity or bank capitalization.) The Fed had the authority to enhance the current level of regional bank supervision, a step the central bank is considering in the wake of the SVB failure.

☆ Market stress indicators flash warnings as banking worries continue
▼ + stars: | 2023-03-20 | by ( ) www.reuters.com time to read: +3 min

March 20 (Reuters) - Fears of a global banking crisis are continuing to swirl, with investors keeping a close eye on a dashboard of indicators that show how stress is rippling through markets and the banking system. Many of these are continuing to flash warnings, though they have not surpassed levels seen during the COVID-19-fueled market turbulence of 2020. But the spread, measuring the gap between the euro zone three-month forward rate agreement and the overnight index swap rate, is still relatively elevated at around -1 basis points in a sign of lingering concern about financial market stress. Cost of insuring European junk bondsThe cost of insuring exposure to European junk bonds rose to the highest since mid-November on Monday at over 516 basis points. This has risen over 130 basis points since March 7 as riskier assets have borne the brunt of bank turmoil on both sides of the Atlantic.

LONDON, March 20 (Reuters) - European bank bonds slumped on Monday following the state-backed rescue of Credit Suisse (CSGN.S) by UBS (UBSG.S) as a wipeout of some bondholders raised concerns around broader bank capital and also hammered bank shares. "The takeover of Credit Suisse by UBS was done fast and should have provided reassurance to the market that we haven’t had another bank collapse. However, what it has done is exposed the issues around AT1 bonds,” said Russ Mould, investment director at AJ Bell. In the bond market, Credit Suisse's Additional Tier 1 (AT1) bonds were bid as low as 1 cent on the dollar on Monday as investors braced for the wipeout. Shares in Credit Suisse (CSGN.S) fell as much as 64.5% while UBS Group (UBSG.S) shares dropped as much as 16%.

☆ Fed Action Could Have Prevented SVB’s Collapse
▼ + stars: | 2023-03-18 | by ( Hal Scott | ) www.wsj.com time to read: +1 min

The Silicon Valley Bank crisis appears to demonstrate the danger of the Federal Reserve not properly performing one of its central functions: acting as a lender of last resort during a run. Thanks to the fall-off from venture-capital firms—its principal clientele—the bank was attracting less deposit funding. And it was maintaining a portfolio of long-dated Treasuries and mortgage-backed securities matched against short-term deposits. From a credit-risk perspective, SVB was much less risky than a standard bank making loans. Its issue was interest-rate risk: After a year’s worth of rate hikes, the losses on SVB’s portfolios couldn’t be offset by decreasing the value of deposits.

☆ About Those ‘Safe’ Silicon Valley Bank Treasurys
▼ + stars: | 2023-03-15 | by ( The Editorial Board | ) www.wsj.com time to read: 1 min

One surprise for investors in the Silicon Valley Bank failure is that it didn’t hold exotic derivatives, structured debt products or other horrors that caused so much financial carnage 15 years ago. SVB held boring Treasurys and highly rated mortgage-backed securities in large quantities. Bad management and negligent oversight from the San Francisco Federal Reserve Bank played a role. But the politicians and regulators who supposedly fixed the financial system after 2008 share responsibility. The banking rules they introduced after 2008 made sovereign bonds such as Treasurys and the mortgage securities of Fannie Mae and Freddie Mac the coin of the realm for bank capital standards.

☆ Fed to consider tougher rules for midsize banks after SVB collapse-source
▼ + stars: | 2023-03-15 | by ( Pete Schroeder | ) www.reuters.com time to read: +2 min

March 14 (Reuters) - The Federal Reserve is considering tougher rules and oversight for midsize banks similar in size to Silicon Valley Bank (SIVB.O), which collapsed suddenly last week, according to a source familiar with the matter. Now, a review of the $209 billion bank's failure being conducted by Fed Vice Chair for Supervision Michael Barr could lead to strengthened rules on banks in the $100 billion to $250 billion range, the source told Reuters. That review of Fed supervision and regulation of the bank will be released by May 1, and augments a review of bank capital rules by Barr already underway. All those requirements could be reworked by the Fed in the aftermath of the collapse, which has also spurred fresh calls from proponents of tougher rules for regulators to rebuild those restrictions. On Tuesday, 50 Democratic lawmakers, including Senator Elizabeth Warren, introduced a bill to repeal the law that eased rules for banks in 2018.

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