Berliner Boersenzeitung - Markets mixed as traders weigh US support after SVB collapse

The collapse Friday of Silicon Valley Bank, which specialised in venture-capital financing largely in the tech sector, came after a huge run on deposits left it unable to stay afloat on its own.

That came in response to its announcement of a stock offering and sale of securities to raise much-needed cash. Its shares collapsed 60 percent in New York on Thursday and trading was suspended Friday morning, before regulators said they had closed it down.

SVB is the largest retail bank to fail since the 2008 financial crisis.

Its problems had built up as the US Federal Reserve's interest rate hikes meant securities it owned were selling for significantly less -- a problem other banks could face.

On Sunday, New York regulators said they had closed another lender, Signature Bank.

The crisis forced the Fed, the Treasury Department and Federal Deposit Insurance Corp. to promise to fully protect all depositors and give backup to any lenders struggling to find cash, providing easier terms on short-term loans.

In a joint statement, they said SVB depositors would have access to "all of their money" starting Monday, March 13, and that taxpayers will not have to foot the bill.

"We are taking decisive actions to protect the US economy by strengthening public confidence in our banking system," the agencies said in the statement.

"The US banking system remains resilient and on a solid foundation," due in large part due to reforms undertaken after the financial crisis that introduced new safeguards for the banking industry.

President Joe Biden vowed to hold "fully accountable" the people responsible for "this mess" and said he would deliver remarks on Monday morning on maintaining a resilient banking system.

- 'White knights' -

On Monday it emerged that HSBC had bought the UK arm of SVB in a deal overseen by the government and Bank of England.

Most Asian markets started the day in the red but some recovered as the closing bell approached, though financial firms took a hit.

Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group dived more than three percent, while Australia's ANZ Group Holdings and National Australia Bank were also well down.

But in wider markets, Hong Kong piled on two percent after suffering steep losses last week, while there were also gains in Shanghai, Seoul, Taipei and Jakarta.

But Tokyo was off more than one percent with Singapore, while Sydney, Wellington, Mumbai, Manila and Bangkok were also in the red.

London, Paris and Frankfurt opened lower but US futures were sharply higher.

Susannah Streeter, of Hargreaves Lansdown, said: "White knights are coming to the rescue after a weekend of intense negotiations to stem contagion from the SVB collapse.

"Investors are waiting with bated breath to see if this rush of regulatory activity to try and limit the fallout from the SVB bank collapse will help soothe volatile markets and so far the bold action appears to be working."

There was little reaction to remarks by China's new Premier Li Qiang that it would be "no easy task" for the country to hit its annual growth target, already one of the lowest in decades.

The SVB crisis will complicate the Fed's plans to further hike interest rates as it struggles to rein in inflation, with investors now expecting it will lift them just 25 basis points at its next meeting, rather than the 50 points tipped last week.

Friday also saw the release of data showing a forecast-busting jump in US jobs creation last month, signalling more work is needed to cool the economy. Inflation figures are due out later this week.

The pledge of support "will bring confidence back to the markets", Carol Pepper of Pepper International told Bloomberg TV.

"But from the Fed's point of view, there are additional dangers that need to be reviewed, which will take some time. So I'm hoping that this will help them to have a good reason to pause because frankly creating financial stability is the number one job at the Fed."

Expectations that the Fed will lift rates less than thought sent the dollar tumbling Friday, and it fell further against its major peers in Asian trade.

- Key figures around 0820 GMT -

Tokyo - Nikkei 225: DOWN 1.1 percent at 27,832.96 (close)

Hong Kong - Hang Seng Index: UP 2.0 percent at 19,695.97 (close)

Shanghai - Composite: UP 1.2 percent at 3,268.70 (close)

London - FTSE 100: DOWN 0.3 percent at 7,724.32

Dollar/yen: DOWN at 134.51 yen from 135.09 yen on Friday

Euro/dollar: UP at $1.0727 from $1.0643

Pound/dollar: UP at $1.2105 from $1.2035

Euro/pound: UP at 88.62 pence from 88.40 pence

West Texas Intermediate: UP 0.6 percent at $77.11 per barrel

Brent North Sea crude: UP 0.5 percent at $83.20 per barrel

New York - Dow: DOWN 1.1 percent at 31,909.64 (close)

(T.Burkhard--BBZ)