Government intervention in Silicon Valley Bank ‘not a bailout’: Pershing Square’s Ackman
The U.S. government’s intervention within the Silicon Valley Bank collapse is “not a bailout”, based on Bill Ackman, founder and CEO of hedge fund Pershing Square Capital Management.
In a tweet, Ackman explained that on this incident, mainly shareholders and bondholders of the banks will likely be affected, and the losses will likely be absorbed by the Federal Deposit Insurance Corporation’s insurance fund.
That is in contrast to the 2008 financial crisis, where the U.S. government injected taxpayer money in the shape of preferred stock into banks, and bondholders were protected.
“Many individuals who screwed up suffered minimal to no consequences. Those were bailouts,” Ackman wrote.
On this case, “the individuals who screwed up will bear the results. The investors who didn’t adequately oversee their banks will likely be zeroed out and the bondholders will suffer an analogous fate,” he added.
Had regulators not intervened, Ackman was of the view that the U.S. would have had seen “a Nineteen Thirties bank run continuing very first thing Monday, causing enormous economic damage and hardship to hundreds of thousands.”
— Lim Hui Jie
SM Entertainment shares tumble almost 20% after Hybe drops takeover bid
Shares of South Korean entertainment company SM Entertainment slid by almost 20% after rival Hybe announced it should withdraw its takeover bid over the weekend.
In an announcement on Sunday, Hybe – the corporate behind K-pop sensation BTS – said it made the choice “after observing that the market has been showing signs of overheating because of competition with each Kakao and Kakao Entertainment.”
It added that “this acquisition, together with the tender offer, may harm shareholder value, and fuel overheating of the market, in making the choice.”
That is the most recent move in a highly public battle between Kakao and Hybe over SM Entertainment which began in February.
Meanwhile, shares of Hybe rose 1.91%, and Kakao’s shares climbed 1.38% Monday morning.
— Lim Hui Jie
Goldman Sachs not sees case for Fed to hike rates in March
Goldman Sachs not sees a case for the Federal Reserve to deliver a rate hike on the Federal Open Market Committee meeting next week, economist Jan Hatzius said in a Sunday note.
“In light of the stress within the banking system, we not expect the FOMC to deliver a rate hike at its next meeting on March 22,” Goldman Sachs said in a note.
Hatzius and a team of economists added they still expect to see 25 basis point hikes in May, June and July, reiterating their terminal rate expectation of 5.25% to five.5%.
— Jihye Lee
SVB fallout won’t hurt Asian banks as their deposits are in loans, Moody’s says
Asian banks won’t be affected by the collapse of Silicon Valley Bank since most of their deposits are in loans — not in Treasurys, based on Moody’s Investors Service.
“In the event you have a look at the standard loan to deposit ratio in Asia, it’s about 90%, so most deposits are invested in loans,” Eugene Tarzimanov, a vp at Moody’s told CNBC’s “Squawk Box Asia.”
“Banks obviously do put money into government securities — local bonds, foreign bonds, but that share isn’t that significant.”
Tarzimanov also noted that Asian banks are resilient due to their “strong capital, good quality of loan books, and most significantly, good funding and liquidity.”
— Sumathi Bala
Silicon Valley Bank’s China enterprise says balance sheet is ‘independent’
The China three way partnership of shuttered bank Silicon Valley Bank said its operations have been “independent and stable” amid the collapse of its U.S. parent last week
SPD Silicon Valley Bank is a 50-50 three way partnership between Silicon Valley Bank and Shanghai Pudong Development Bank.
The bank said in an announcement on its website that it “has all the time operated in a stable manner in accordance with Chinese laws and regulations, with a normal governance framework and independent balance sheet.”
“As China’s first technology bank, SPD Silicon Valley is committed to serving Chinese science and technology corporations, and all the time follows Chinese regulations for stable operations,” the bank added.
— Lim Hui Jie
Biden tweets regulators reached ‘solution’ that protects’ U.S. economic system
President Joe Biden tweeted that U.S. regulators have reached a “solution” regarding issues related to Silicon Valley Bank and Signature Bank.
“The American people and American businesses can trust that their bank deposits will likely be there once they need them,” he said in a Twitter thread.
“I’m firmly committed to holding those chargeable for this mess fully accountable and to continuing our efforts to strengthen oversight and regulation of larger banks in order that we aren’t on this position again,” Biden wrote in a tweet.
— Jihye Lee
CNBC Pro: Shares of this little-known global chip firm are set to rise by 50%, Barclays says
Shares of a U.K.-based technology company that designs custom chips and semiconductors are expected to rise by greater than 50% over the subsequent 12 months, based on Barclays Equity Research.
The investment bank said a rapidly growing data center space would “drive sales and profit growth faster than other company in our coverage.”
CNBC Pro subscribers can read more concerning the semiconductor stock here.
— Ganesh Rao
CNBC Pro: ‘Unprecedented growth’: Citi reveals its 4 top stocks in renewables without delay
The world goes through a “rapid and transformational change” with regards to energy, said Citi, naming 4 buy-rated stocks as “top picks” within the space.
CNBC Pro subscribers can read more here.
— Weizhen Tan
Silicon Valley Bank fallout unlikely to affect Asia growth outlook: Goldman Sachs
Goldman Sachs’ chief Asia-Pacific economist Andrew Tilton said the region’s economic outlook is unlikely to be affected from the fallout of Silicon Valley Bank’s collapse.
“To the degree that that is addressed relatively quickly by regulators and doesn’t spread to additional entities beyond those which were noted thus far, then we’re less more likely to see a major impact on Asia growth outlook,” Tilton told CNBC’s “Squawk Box Asia.”
He reiterated the firm’s forecast for China’s economy and emphasized that it should be mostly driven by the reopening after its zero-Covid policy.
“We proceed to expect 5.5% growth for China this 12 months, mostly driven by the reopening and possibly less sensitive to this particular issue,” Tilton said.
— Jihye Lee
Dick Bove says depositors have lost faith in American banks
Veteran bank analyst Dick Bove said American banks have lost credibility with average investors because of what he described as “accounting tricks,” he told CNBC’s “Squawk Box Asia.”
“The accounting of banking in america is garbage,” he said. Banks are using “accounting gimmickry to avoid indicating what the true equity is in these banks,” he added.
Bove further noted that the issues around Silicon Valley Bank’s collapse was led by Federal Direct Loans.
“They’ve $110 billion of investments in U.S. government-backed securities, the treasuries, the mortgage-backed securities,” he said. “It is not the loans that created the issue, it’s the U.S.-backed securities that created the issue.”
— Jihye Lee
Regulatory backstop for SVB failure aimed toward protecting the economy, officials say
Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and FDIC Chairman Martin J. Gruenberg issued a joint statement Sunday night explaining their reasoning for devising a plan to backstop depositors and protect financial institutions with money at Silicon Valley Bank.
“We’re taking decisive actions to guard the U.S. economy by strengthening public confidence in our banking system,” the statement said. “This step will be certain that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a way that promotes strong and sustainable economic growth.”
Silicon Valley Bank failed Friday, marking the most important bank failure for the reason that 2008 financial crisis. This then raised concern over other banks that could possibly be seeing similar risks.
“The U.S. banking system stays resilient and on a solid foundation, largely because of reforms that were made after the financial crisis that ensured higher safeguards for the banking industry,” the officials said in an announcement.
“Those reforms combined with today’s actions reveal our commitment to take the needed steps to be certain that depositors’ savings remain secure,” they added.
— Fred Imbert
Cryptocurrencies jump with stock futures, even after closure of Signature Bank
Crypto climbed with stocks as U.S. regulators unveiled a plan to guarantee depositors at Silicon Valley Bank would get their money after the bank’s spectacular collapse Friday.
Bitcoin and ether each jumped about 7% after 6:30 p.m. ET, based on Coin Metrics.
The moves got here at the same time as Recent York’s Signature Bank was closed by the Recent York State Department of Financial Services Sunday, based on a joint statement by the Treasury, Federal Reserve, and FDIC.
Signature Bank was one other famously crypto-friendly institution and the subsequent biggest one next to Silvergate, which announced its impending liquidation last week.
Its closure adds to fears by crypto investors and entrepreneurs that the industry is being de-risked from the U.S. banking system, leaving it without “on-ramps” that allow fiat money to flow into crypto assets. Silvergate and Signature helped solve this problem by creating easy banking services and payment platforms for crypto corporations.
Wall Street analysts Friday had maintained buy rankings on Signature Bank, despite the bad news about its peers earlier within the week.
— Tanaya Macheel
Futures jump after regulators announce backstop of SVB depositors
Futures prolonged their gains just before 6:30 p.m. ET after U.S. regulators unveiled a plan to stem the damage from Silicon Valley Bank’s collapse.
Dow futures were last higher by 297 points, or 0.9%. S&P 500 futures jumped 1.1% and Nasdaq Composite futures advanced 1.2%.
— Tanaya Macheel
