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Bank shares recover despite the fears of crisis.

 

Index
Shares in First Republic Bank rose 27 per cent, or $8.42, to close at $39.63, a day after falling 62 per cent, as investors regained some confidence following the panic unleashed by the failure of two lenders, Silicon Valley Bank and Signature Bank, in three days. Those hit hardest by the sell-off this week partially recovered. Lenders clawed back some of their losses despite Moody's downgrading the sector, a move the agency said was designed "to reflect the rapid deterioration in the operating environment" after bank runs at SVB, Signature and Silvergate, another bank which last week said that it would wind down. Over the weekend, US regulators scrambled to pull together an emergency rescue package to ensure customers of SVB and Signature had access to their money.

"To shore up the wider system, the Federal Reserve also announced a funding programme to ensure lenders can meet the needs of all their depositors. On Monday, President Biden sought to reassure Americans that the banking system was "safe", adding that investors in failed institutions would "lose their money. His intervention set the stage for a rout of financial stocks. Even shares in Charles Schwab, with a market value of more than $100 billion, fell 11.6 per cent on Monday. Shares in Charles Schwab rose 9.2 per cent, or $4.77, to close at $56.68.

Trades by Citadel, run by the billionaire Ken Griffin, are closely watched by investors. Having taken control of SVB last week, the Federal Deposit Insurance Corporation is looking at sales of its assets. The Financial Times reported that heavyweight investment groups, including Carlyle Group, KKR, Blackstone, Apollo Global Management, and Ares Management, are examining SVB's loan book for potential purchases. The decision was "not crypto related," the state's Department of Financial Services said.

The new boss of Silicon Valley Bridge Bank, formed by US officials to manage SVB's deposits and assets, encouraged customers to shift money back into its accounts. "The number one thing you can do to support the future of this institution is to help us rebuild our deposit base," Tim Mayopoulos told customers, "both by leaving deposits. The crisis that led to the rescue sale of Silicon Valley Bank's UK arm to HSBC for a symbolic £1 raises questions about how small lenders in the UK are supervised, the Commons Treasury committee has warned. The committee yesterday opened a post-mortem into the unravelling of SVB's British arm, with its chairwoman, Harriett Baldwin, sending a series of written questions to Andrew Bailey, governor of the Bank of England, and Andrew Griffith, the City minister, seeking more information on their handling of SVB UK.

Bailey and other Bank officials have also been summoned to appear before the committee on March 28 to give evidence on the crisis. This led to a frantic weekend of talks as regulators and ministers raced to find a solution that would avoid causing chaos for the thousands of technology and venture capital firms that are customers of SVB UK. A deal with HSBC was reached in the early hours of Monday.

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