Bank Freakout

Republic First is the good kind of bank failure

29 Apr 2024

The shuttered lender was low on equity and high on drama, home to years of lawsuits and board fights. Even with familiar balance-sheet issues, there’s little risk of knock-on effects elsewhere. Bank windups are working - though judging by placid depositors, maybe a bit too well.

Rescuing a bank is like making a fine soufflé

13 Mar 2024

Steven Mnuchin’s $1 bln swoop on New York Community Bank may be more challenging than his rehabilitation of mortgage lender IndyMac in 2009, but the returns could be ample. Bank rescues have many ingredients. Timing, skill and luck separate those that rise from those that sag.

A year on, SVB’s killer is still at large

7 Mar 2024

Twelve months after Silicon Valley Bank’s demise, investors worry more about real estate than flighty depositors. The disjointed system that enabled a crisis remains intact, though, with patchy oversight, incomplete safety nets and ambiguity over who loses if a lender fails.

Tiny tech bank defies US massacre of the minnows

8 Jun 2023

After a string of failures, consolidation is inevitable among the country’s 4,100 lenders. But $1 bln Live Oak, with no branches and lashings of technology, punches well above its weight. Even though rising rates may hurt, the bank shows that bigger isn’t necessarily better.

Saving depositors is exercise in squaring circles

11 May 2023

Big US banks will pay a one-off $16 bln levy to cover the windup of SVB and Signature Bank. Lenders that benefited most will bear the heaviest burden but are also the most vulnerable. That trade-off is just an aperitif for bigger deposit-insurance dilemmas that lie in store.

Credit Suisse debacle raises oversight question

9 May 2023

Swiss authorities hailed the state-backed rescue of the stricken lender by UBS as a commercial solution that will be light on domestic taxpayers. Banking professor and former SNB official Urs Birchler tells The Exchange podcast why the quick fix is far from ideal.

First Republic’s rescue cements ‘too big to fail’

4 May 2023

JPMorgan rode to the rescue of the mid-sized lender, which recently became the latest US bank to keel over. In this Viewsroom podcast, Breakingviews columnists discuss the impact of lending giants bulking up further, and whether that itself stores up future risks.

First Republic collapse fires up capitalist elite

2 May 2023

Bank failures, rapidly rising interest rates and looming recession are dominating the agenda among finance types gathered at onetime junk-bond king Michael Milken’s annual Beverly Hills summit. Where there’s distress, however, there’s also opportunity. At least up to a point.

Digital “Chicago Plan” fixes many financial woes

28 Apr 2023

In the 1930s, economists drew up a radical blueprint to create safer banks. The advent of digital currencies issued by central banks is an opportunity to revisit the idea, writes Edward Chancellor. A shift could stabilise banking, reduce inflation, and even lower government debt.

Credit Suisse mess leaves scattered Swiss debris

24 Apr 2023

A $3 bln state-sponsored UBS takeover prevented the failure of Bern’s other big bank. Yet small, export-oriented Swiss firms now only have one large lender for their needs, and additional bank regulation is likely. Meanwhile, historic US tax issues may come home to roost.

UBS investors’ M&A fears are easing

24 Apr 2023

One question hanging over Chair Colm Kelleher’s Credit Suisse deal was whether there’d be many assets left by the time it closed. But the target’s outflows were smaller than they could have been, and the valuable local unit held up well. That buttresses shareholders’ confidence.

Bank mess hands tricky start to top Indian IT boss

13 Apr 2023

There’s no honeymoon for K Krithivasan, the incoming CEO at $145 bln Tata Consultancy. Like other outsourcers, it has struggled to retain workers. Now staff are squeezed by soaring rents in the country’s Silicon Valley. Cost pressures are rising just as US clients hit the brakes.

Sterling’s safe haven status will prove fleeting

6 Apr 2023

Investors have piled into the pound since the start of troubles at US banks, pushing it 5% higher against the dollar. Yet easing turmoil stateside will lead markets to fret more over UK issues: a probable recession, dire long-term growth, and a likely dovish central bank.

Swiss mega-bank has scope to shrink to greatness

5 Apr 2023

Swallowing Credit Suisse propels UBS into the big leagues, with $3.4 trln of wealth assets and more dealmaking fees than Citi. Staying large means taking on volatile units and risky clients. Unlike previous empire-builders, CEO Sergio Ermotti has a remit to slash aggressively.

Bank bail-ins, and how to prevent climate bailouts

4 Apr 2023

Mark Carney helped design the post-2008 system for resolving bust lenders. In this episode of the Exchange, the ex-Bank of England governor tells George Hay what he makes of last month’s rescue of Credit Suisse, and how to limit future financial sector hits from climate change.

How post-2008 bank rules led to a 2023 problem

30 Mar 2023

After the last crisis, regulators pushed lenders away from fickle market-based finance to deposits instead. Yet Credit Suisse and Silicon Valley Bank showed that not all customer cash is stable. Applying the same fix again is impossible, which means the problem is here to stay.

Bank rescue real estate turns from dowry to downer

30 Mar 2023

In 2008, failed lenders like Bear Stearns owned prime property that helped underpin value for buyers. But Credit Suisse sold off much of its real estate before UBS swooped. Its long-term leases may prove a headache as remote working shrinks demand for office space.

CEO nostalgia won’t bring back the alpha

29 Mar 2023

Activist Carl Icahn wants Illumina’s Jay Flatley back at the helm of the US biotech firm. He’d be joining the zeitgeist: UBS and Disney have both reinstalled former CEOs too. Competence has value, but past performance doesn’t guarantee greatness. Long tenure brings its own risks.

Boomerang UBS boss ticks several important boxes

29 Mar 2023

Sergio Ermotti is returning as CEO after less than three years. The suboptimal governance move highlights a dearth of senior banking talent. But Ermotti’s record of shrinking an investment bank – and his Swiss passport – will be vital in the tricky integration of Credit Suisse.

Switzerland casts Asian bankers in a rich light

29 Mar 2023

Credit Suisse’s blow-up will speed up a rethink about where crazy rich Asians will park $180 trln of household wealth. Global banks’ risk appetite is shrinking even as HSBC and others ramp up in the region via acquisitions. Rising giants like Singapore’s DBS and UOB will benefit.