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"It cannot be that financial institutions are doing well because they treat their customers badly," Chan-Jae Yoo, a BaFin official, said in an interview. Deutsche Kreditwirtschaft, an umbrella organisation that lobbies for German finance, said German banks are "extremely stable and robust" and confidence remains "high" and "unaffected" by recent turmoil stemming from the collapse of lenders in the United States and Switzerland. "The mere fact that consumers are increasingly asking us and seeking our advice is proof enough that they do not fully trust financial institutions," he said. Protections and rights for customers of financial institutions have come under increased scrutiny from regulators and the German courts. "We want services to establish themselves in the marketplace that meet consumer needs, not feed the financial industry," he said.

☆ Stubborn inflation keeps ECB on course for more rate hikes
▼ + stars: | 2023-03-31 | by ( Francesco Canepa | ) www.reuters.com time to read: +3 min

"The pressure on the ECB to continue raising interest rates remains high," Commerzbank economist Christoph Weil said. Consumer prices in the euro zone rose by 6.9% in March after an 8.5% increase in February, implying the biggest drop since Eurostat started collecting data in 1991. Analysts polled by Reuters had expected headline inflation in the 20 countries that share the euro to come in at 7.1% and core inflation at 7.5%. Strengthening the case for more tightening, euro zone unemployment remained stubbornly low at 6.6%. This is a concern for policymakers who fear it could give workers greater bargaining power in salary negotiations and lead to higher wage increases that could perpetuate high inflation.

Two of Germany's largest airports, Munich and Frankfurt, suspended flights, while long-distance rail services were cancelled by rail operator Deutsche Bahn (DBN.UL). "Millions of passengers who depend on buses and trains are suffering from this excessive, exaggerated strike," a Deutsche Bahn spokesperson said on Monday. At the same time, in France they go on strike all the time about something," said passenger Lars Boehm. The head of the Bundesbank Joachim Nagel said last week Germany needed to avoid a price-wage spiral. "Despite signs of second-round effects, we have not observed a destabilising price-wage spiral in Germany so far."

☆ German business sentiment unexpectedly rises in March
▼ + stars: | 2023-03-27 | by ( ) www.reuters.com time to read: +1 min

BERLIN, March 27 (Reuters) - German business morale unexpectedly rose in March, adding to signs that Europe's largest economy is stabilizing despite recent turmoil in the banking sector, a survey showed on Monday. The Ifo institute said its business climate index jumped to 93.3 from a reading of 91.1 in February. The increase in business morale for the fifth month in a row was driven primarily by business expectations, Ifo said. The expectations index rose to 91.2 in March from a revised 88.4 the month before, its highest level in at least a year. Reporting by Miranda Murray, Editing by Friederike HeineOur Standards: The Thomson Reuters Trust Principles.

☆ Deutsche Bank shares slide 9% after sudden spike in the cost of insuring against its default
▼ + stars: | 2023-03-24 | by ( Elliot Smith | ) www.cnbc.com time to read: +1 min

A logo stands on display above the headquarters of Deutsche Bank AG at the Aurora Business Park in Moscow, Russia. Deutsche Bank shares fell by more than 9% in early trade on Friday following a spike in credit default swaps on Thursday night, as concerns about the stability of European banks persisted. Credit default swaps — a form of insurance for a company's bondholders against its default — leapt to 173 basis points on Thursday night from 142 basis points the previous day. Deutsche led broad declines for major European banking stocks on Friday, with Commerzbank , Credit Suisse , Societe Generale and UBS all falling more than 5%. After completing a multibillion euro restructure that began in 2019, with the aim of reducing costs and improving profitability, Deutsche Bank has reported 10 straight quarters of profit.

☆ Gold steadies, Fed pause bets brighten outlook
▼ + stars: | 2023-03-24 | by ( Ashitha Shivaprasad | ) www.reuters.com time to read: +2 min

Spot gold was little changed at $1,996.19 per ounce at 1202 GMT, holding a relatively narrow $20 range. U.S. gold futures rose 0.1% to $1,997.50. U.S. 10-year Treasury yields fell for the third straight session, while the dollar index rose 0.7%. Commerzbank raised its year-end gold forecasts to $2,000, joining similar upward revisions by Goldman Sachs, Citi and ANZ. Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Sohini Goswami and Maju SamuelOur Standards: The Thomson Reuters Trust Principles.

The index of top European banks (.SX7P) was down 1% in early trading, with German banking giants Deutsche Bank (DBKGn.DE) and Commerzbank (CBKG.DE) both falling 0.8%. The rescue of Credit Suisse, which followed the collapses of California-based Silicon Valley Bank (SVB) (SIVB.O) and New York-based Signature Bank (SBNY.O) ignited broader concerns about investors' exposure to a fragile banking sector. The decision to prioritise shareholders over Additional Tier 1 (AT1) bondholders rattled the $275 billion AT1 bond market and some Credit Suisse AT1 bondholders are seeking legal advice. "The AT1 instruments issued by Credit Suisse contractually provide that they will be completely written down in a 'viability event', in particular if extraordinary government support is granted," FINMA said. However, some watchers think the banking system is more vulnerable to rumour and rapid moves in an era of widespread social media use, posing a challenge for regulators trying to tamp down instability.

☆ A bank manager wins $370,000 after a panel of judges says she would've likely been promoted if it weren't for sex discrimination
▼ + stars: | 2023-03-23 | by ( Sarah Jackson | ) www.businessinsider.com time to read: +2 min

An ex-employee of Germany's Commerzbank will get $370,000 after judges say sex discrimination likely cost her a promotion. Jagruti Rajput was deputy head of markets compliance in the bank's London office but says a male colleague was treated as the senior member instead. Rajput also says a junior employee continued to do much of her job when she came back from maternity leave instead of handing over the reins. In the UK, an employment tribunal is a judicial body, composed of several judges, that often handles employer-employee disputes. She was also dissuaded from attending a quarterly review meeting, which the tribunal found to be an act of maternity discrimination.

In a package engineered by Swiss regulators on Sunday, UBS will pay 3 billion Swiss francs ($3.23 billion) for 167-year-old Credit Suisse Group AG (CSGN.S) and assume up to $5.4 billion in losses. Investor focus has now shifted to the massive blow some Credit Suisse bondholders will take, adding to anxiety about other banking sector risks including contagion and the fragile state of U.S. regional lenders. UBS acquiring Credit Suisse for 3 billion francs a week ago would have seemed like a terrific deal. Buildings of Swiss banks UBS and Credit Suisse are seen on the Paradeplatz in Zurich, Switzerland March 20, 2023. QUESTIONS FOR UBSThe deal to buy Credit Suisse will make UBS Switzerland’s only global bank and the Swiss economy more dependent on a single lender.

European bank shares slumped, with an index of leading lenders (.SX7P) down 5.8%. Credit Suisse shares slumped 62%, reflecting the huge loss its shareholders will see in their investment in the bank. Monetary authorities in Singapore and Hong Kong, where Credit Suisse hosts large regional offices, separately said the Swiss bank's business continued without interruption. And Credit Suisse urged its staff to go to work, according to a memo to staff seen by Reuters. Credit Suisse staff arriving to work in Hong Kong and Singapore on Monday morning, however, fretted about retrenchments and retaining business.

☆ European banks battered after Credit Suisse rescue
▼ + stars: | 2023-03-20 | by ( Lucy Raitano | ) www.reuters.com time to read: +3 min

LONDON, March 20 (Reuters) - Shares in European banks were battered in early trade on Monday following UBS's (UBSG.S) state-backed rescue of Credit Suisse (CSGN.S) that brought with it massive writedowns for the latter's bondholders. Shares in Credit Suisse (CSGN.S) fell more than 63% while UBS Group (UBSG.S) shares were last down 12.5%. UBS on Sunday agreed to pay 3 billion Swiss francs ($3.23 billion) for 167-year-old Credit Suisse and assume up to $5.4 billion in losses. JPMorgan said that although UBS stood to gain in the longer-term from the deal, the writedown of the AT1 bonds would impact other European banks. Barclays cut its view on European banks to "neutral" from "positive" on Monday, citing likely increased regulatory scrutiny after Silicon Valley Bank collapse and UBS agreeing to buy Credit Suisse.

[1/2] European Central Bank (ECB) President Christine Lagarde speaks during a news conference following the ECB's monetary policy meeting in Frankfurt, Germany March 16, 2023. Reuters Graphics Reuters GraphicsPresident Christine Lagarde noted it was impossible to determine the future rate path amid "completely elevated" uncertainty stemming from market ructions. "Given financial instability risks, there's growing uncertainty on future ECB actions beyond this pre-signalled rate hike," said Daniele Antonucci, chief economist and macro strategist at Quintet Private Bank. Piet Christiansen, chief analyst at Danske Bank, said he was sticking to a call for a 4% peak ECB rate. "Unless this turns into a macroeconomic crisis then we are ripe for a sell-off and a repricing of rate hike expectations," he said.

Credit Suisse fell below 2 Swiss francs ($2.18) for the first time after Saudi National Bank said it could not go above 10% ownership due to a regulatory issue. Credit Suisse shares fell by as much as 23.8% and were last down 20.2%. An index of European bank stocks (.SX7P) fell in morning trading and was last down 6.1%, hitting its lowest since January 3. Fears of contagion after the collapse of tech-focused lender SVB (SIVB.O) and New York-based Signature Bank (SBNY.O) last week have weighed on European bank stocks. We move from the problems of American banks to those of European banks, first of all Credit Suisse," said Carlo Franchini, head of institutional clients at Banca Ifigest in Milan.

Credit Suisse's shares were trading down nearly 22% in Zurich on Wednesday, and the cost of buying insurance against the risk of a Credit Suisse default hit a new record high, according to S&P Global Market Intelligence. Customers withdrew billions from Credit Suisse last year, contributing to the bank’s biggest annual loss since the global financial crisis in 2008. On Tuesday, it acknowledged “material weakness” in its financial reporting and scrapped bonuses for top executives. Outflows from the bank had “significantly moderated” after customers withdrew 111 billion francs ($122 billion) in the three months to December, Körner added. Körner said the collapse of SVB was “somewhat of an isolated problem.” Credit Suisse follows “materially different and higher standards when it comes to capital funding, liquidity and so on,” he added.

In an interview with Bloomberg, the chairman of the Saudi National Bank said it would not increase its stake in Credit Suisse. The Saudi National Bank — which describes itself as the kingdom’s biggest bank — committed $1.5 billion of the $4 billion in new capital Credit Suisse raised to fund its overhaul. Credit Suisse declined to comment. Customers withdrew billions from Credit Suisse last year, contributing to the bank’s biggest annual loss since the global financial crisis in 2008. Körner said the collapse of SVB was “somewhat of an isolated problem.” Credit Suisse follows “materially different and higher standards when it comes to capital funding, liquidity and so on,” he added.

☆ AMERICAS Bank stress, bond volatility and disinflation
▼ + stars: | 2023-03-14 | by ( ) www.reuters.com time to read: +5 min

But the implications of this sudden bout of financial instability - and its potential economic and policy fallout - were most clearly seen in the interest rate and bond markets. Implied terminal rates for the European Central Bank and Bank of England have been dramatically scaled back too - though one or two further hikes are still priced for those central banks. But the Fed rethink has led to seismic action on the U.S. Treasury market, with the biggest drop in 2-year Treasury yields on Monday since the stock market crash of 1987. Credit spreads in the corporate bond markets have also widened sharply as investors fear an economy-wide tightening of borrowing standards and financial conditions. It would certainly think twice about tightening policy again into this level of financial stress and bond market upheaval.

"Bank runs have started (and) interbank markets have become stressed," said Damien Boey, chief equity strategist at Sydney-based investment bank Barrenjoey. A furious race to reprice interest rate expectations also buffeted markets as investors bet the Federal Reserve will be reluctant to hike next week. Traders currently see a 50% chance of no rate hike at that meeting, with rate cuts priced in for the second half of the year. The prospect of higher interest rates had been "the reason investors have been really excited about Japan bank stocks." After marathon weekend talks, HSBC HSBA.L said it was buying the British arm of SVB for one pound ($1.21).

Traders currently see a 50% chance of no rate hike at that meeting, with rate cuts priced in for the second half of the year. Shares of First Republic Bank (FRC.N) tumbled more than 60% as news of fresh financing failed to reassure investors, and so did Western Alliance Bancorp (WAL.N) and PacWest Bancorp (PACW.O). U.S. bank regulators sought to reassure nervous customers on Monday who lined up outside SVB's Santa Clara, California, headquarters, offering coffee and donuts. Regulators also moved swiftly to close New York's Signature Bank SBNY.O, which had come under pressure in recent days. In China, where SVB was the main go-to foreign bank for the majority of start-ups, entrepreneurs and venture funds were also scrambling for alternative funding.

☆ Morning Bid: Bank stress, bond volatility and disinflation
▼ + stars: | 2023-03-14 | by ( ) www.reuters.com time to read: +5 min

SVB's meltdown sparked a partisan battle in Washington on Monday, with Democrats arguing that a Trump-era change to bank oversight rules undermined the stability of regional banks. In the money markets, indicators of credit risk in the U.S. and euro zone banking systems edged up. [1/3] U.S. President Joe Biden delivers remarks on the banking crisis after the collapse of Silicon Valley Bank (SVB) and Signature Bank, in the Roosevelt Room at the White House in Washington, D.C., U.S. March 13, 2023. On Monday morning, U.S. bank regulators sought to reassure nervous customers who lined up outside SVB's Santa Clara, California, headquarters, offering coffee and donuts. A furious race to reprice interest rate expectations also sent waves through markets as investors bet the Fed will be reluctant to hike next week.

☆ Silicon Valley Bank collapse: What you need to know
▼ + stars: | 2023-03-13 | by ( ) www.reuters.com time to read: +4 min

March 13 (Reuters) - Bank stocks around the world plunged on Monday even as President Joe Biden vowed to ensure the safety of the U.S. banking system, after Silicon Valley Bank (SIVB.O) and Signature Bank (SBNY.O) collapsed. U.S. authorities launched emergency measures on Sunday to shore up confidence in the banking system after the failure of Silicon Valley Bank threatened to trigger a broader financial crisis. *California banking regulators closed the bank, which did business as Silicon Valley Bank, and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver for later disposition of its assets. All of the depositors of Signature Bank and Silicon Valley Bank will be made whole, and "no losses will be borne by the taxpayer," the U.S. Treasury Department and other bank regulators said. *In Britain, HSBC (HSBA.L) bought the UK arm of Silicon Valley Bank for a symbolic one pound on Monday, rescuing a key lender for technology startups in England.

Biden said his administration's actions over the weekend meant "Americans can have confidence that the banking system is safe", while also promising stiffer regulation after the biggest U.S. bank failure since the 2008 financial crisis. Shares in U.S. banking giants JP Morgan Chase (JPM.N), Morgan Stanley (MS.N) and Bank of America (BAC.N) nevertheless weakened. But your second thought is, how big was that crisis, how big were the risks that this step had to be taken?" U.S. regulators stepped in on Sunday after the collapse of SVB, which had seen a run after a big bond portfolio hit. [1/3] U.S. President Joe Biden delivers remarks on the banking crisis after the collapse of Silicon Valley Bank (SVB) and Signature Bank, in the Roosevelt Room at the White House in Washington, D.C., U.S. March 13, 2023.

March 13 (Reuters) - Euro zone government bond yields tumbled on Monday as the collapse of Silicon Valley Bank (SVB) sent investors rushing into safe-haven assets and caused traders to bet on a smaller rate hike from the European Central Bank (ECB) on Thursday. SVB's collapse sparked a massive rally in European and global bond markets on Monday. The German 2-year bond yield was last down 34 basis points (bps) at 2.746%, on track for its biggest one-day drop since 1995. Market pricing showed traders thought a 25 bp hike is now the more likely outcome, despite 50 bps appearing almost certain last week. The European Central Bank is not planning an emergency meeting of its banking supervisory board on Monday after the collapse of SVB, a senior source told Reuters.

Germany's Commerzbank (CBKG.DE) fell as much as 12.7%, while Credit Suisse (CSGN.S) hit a new record low after falling 15%. Biden said his administration's rapid actions at the weekend should reassure Americans that the U.S. banking system is safe, and promised stiffer bank regulation after the country's biggest bank failure since the 2008 financial crisis. "Americans can have confidence that the banking system is safe. But big U.S. banks including JP Morgan Chase (JPM.N), Morgan Stanley (MS.N) and Bank of America (BAC.N) also weakened. In the money markets, a closely watched indicator of credit risk in the U.S. banking system edged up, as did other indicators of credit risk in the euro zone.

☆ Swiss regulator monitoring banks and insurers after SVB collapse
▼ + stars: | 2023-03-13 | by ( ) www.reuters.com time to read: +3 min

ZURICH, March 13 (Reuters) - Swiss financial regulator FINMA on Monday said it was closely monitoring the banks and insurers it oversees after the U.S. moved to guarantee the deposits of two failing lenders in an effort to stem contagion. "FINMA takes note of the media reports on Silicon Valley Bank and Signature Bank in the USA and is closely monitoring the situation," FINMA said in a statement. "FINMA is evaluating the direct and indirect exposure of the banks and insurance companies it supervises to the institutions concerned," it said. FINMA said it was in contact with various institutions which could be affected, but declined name them or the measures it might take. The Swiss National Bank declined to comment on the effect of the Silicon Valley Bank's collapse could have on Switzerland's financial sector.

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