Category Archives: Banking

SVB collapse may be start of ‘slow rolling crisis’, warns BlackRock boss

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Larry Fink tells investors more ‘shutdowns and seizures’ in US possible and predicts inflation and interest rates to rise

The collapse of Silicon Valley Bank could just be the start of “a “slow rolling crisis” in the US financial system with “more seizures and shutdowns coming”, the chief executive of the world’s largest asset manager has warned.

The CEO of BlackRock, Larry Fink, also predicted in a letter to investors and company bosses that inflation would persist and rates continue to rise, trends that both contributed to SVB’s collapse.

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Credit Suisse warns of ‘material weaknesses’ in financial reporting

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Swiss bank’s shares fall as annual report reveals another blow to its bid to recover from string of scandals

Credit Suisse has said it found “material weaknesses” in its financial reporting controls and that clients were still withdrawing cash, the latest blow to the Swiss bank as it tries to recover from a string of scandals.

The bank’s shares fell as much as 5% on Tuesday, dropping as low as 2.12 Swiss francs – close to the record low on Monday – before recovering some ground to be down 1.7%. Credit Suisse’s bonds also weakened to record lows on Tuesday, after comments in its delayed annual report.

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TechScape: How Silicon Valley Bank UK was saved

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In this week’s newsletter: While its quick slip into financial hardship has left American bankers reeling, its UK division is surprisingly fine. But the tech sector isn’t out of trouble yet

Last week, if you had heard of Silicon Valley Bank UK, you probably worked in tech. The bank had only been spun out in to a separate entity last summer, after its few thousand corporate customers pushed it over a regulatory threshold, and while SVB had grown to almost hold £10bn of deposits, with £5.5bn of outstanding loans, it was very much a specialist player.

The bank’s selling point was that it understood the needs of the “innovation economy”, something that high street banks frequently failed to acknowledge. A startup might have zero revenue, yet hold £5m in the bank and have 10 employees, a profile fundamentally different from a typical small business. As a result, trying to get something as simple as a corporate credit card could be a surprising hassle, and when SVB arrived on the UK scene, it was enthusiastically adopted by founders and venture capitalists alike.

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Silicon Valley Bank: global banking shares slide as fallout spreads

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Stock markets fail to be reassured by Joe Biden’s intervention, as SVB failure is followed by Signature

Global financial markets have come under severe pressure after the collapse of Silicon Valley Bank, despite governments on both sides of the Atlantic taking extraordinary measures to maintain confidence in the banking system.

On a day conjuring up memories of the 2008 financial crisis, the US president, Joe Biden, sought to restore calm by insisting the US banking system remained safe, while HSBC stepped in to buy the UK arm of the failed technology lender after a deal brokered by the British government and the Bank of England.

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Silicon Valley Bank: US bank shares tumble despite Biden insists system is safe; HSBC rescues SVB UK – business live

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Silicon Valley Bank UK has been sold to HSBC for £1, in a deal that protects depositors’ money says Treasury and Bank of England


Here’s Sky’s Ed Conway:

Important developments.

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Silicon Valley Bank collapse ‘could force central banks to stop interest rate rises’

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Analysts say US Federal Reserve will probably reject further increase in borrowing costs next week

The world’s most powerful central banks could be forced to stop raising interest rates after the Silicon Valley Bank crisis, economists have said, amid growing signs of financial stress linked to rapid increases in borrowing costs over the past year.

Analysts said the US Federal Reserve would probably leave interest rates on hold at its decision next week, as the meltdown at the California-based technology lender ripples through global financial markets.

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UK racing to secure deal to protect firms from Silicon Valley Bank collapse

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Rishi Sunak and Jeremy Hunt explore options to help tech and life sciences sectors

The UK government is scrambling to secure an emergency deal to protect Britain’s tech and life sciences sectors from major losses after the collapse of Silicon Valley Bank (SVB), as financial markets braced for further volatility after the biggest bank failure since 2008.

The prime minister, Rishi Sunak, and the chancellor, Jeremy Hunt, signalled on Sunday that they were exploring a range of options, including an emergency fund that could provide a cash lifeline to support startups, as bidders put their hat in the ring for a potential takeover of the UK subsidiary.

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Yellen rejects Silicon Valley Bank bailout as regulators auction assets

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US treasury secretary says Biden administration is working closely with regulators to help depositors as fears of banking crisis rise

The US treasury secretary, Janet Yellen, said on Sunday there would be no bailout for Silicon Valley Bank, which collapsed this week, raising fears of a crisis, but also said the Biden administration was working with regulators to help depositors hit by the fall of SVB.

Yellen said conditions did not match the 2008 financial crisis, when the collapse of large institutions threatened to bring down the global financial system. She also sought to calm fears the $23tn US banking system could be affected by the fall of a regional bank.

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Why Silicon Valley Bank was so important to UK tech sector

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SVB specialised in high-growth startups, solving problems other lenders would not touch

Silicon Valley Bank’s name isn’t just hollow branding. Founded in Santa Clara in the 1980s, in the heart of the Bay Area’s tech cluster, it was a regional bank that served the local economy.

As that local economy became the engine of American growth, SVB – which collapsed on Friday – grew alongside it. It remained a tech specialist, a limitation that allowed it to continue to be regulated as a regional bank and so avoid the stricter requirements piled on larger competitors, but otherwise spread across the US and the world.

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Silicon Valley Bank chief pressed Congress to weaken risk regulations

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CEO Greg Becker personally led the bank’s half-million-dollar push to reduce scrutiny of his institution – and lawmakers obliged

This story was first published in the Lever

Eight years before the second-largest bank failure in American history occurred this week, the bank’s president personally pressed Congress to reduce scrutiny of his financial institution, citing the “low risk profile of our activities and business model”, according to federal records reviewed by the Lever.

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Silicon Valley Bank fails in largest bank collapse since 2008 crisis

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US regulators seize SVB’s assets after a run on the bank, as global institutions monitor situation closely

US regulators rushed to seize the assets of top tech lender Silicon Valley Bank on Friday after a run on the bank, marking the largest failure of such an institution since the height of the financial crisis more than a decade ago.

Silicon Valley Bank (SVB), the nation’s 16th largest bank, failed after depositors – mostly technology workers and venture capital-backed companies – hurried to withdraw their money this week as anxiety over the bank’s situation spread.

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Crypto bank Silvergate announces liquidation amid sector turmoil

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Wind-down and liquidation plan follows mass withdrawal of deposits after collapse of FTX exchange

The cryptocurrency-focused US lender Silvergate is to wind down its operations after it was hit by customer withdrawals following the collapse of crypto exchange FTX.

The California-based bank had warned last week it was “less than well capitalised” after depositors demanding their money back, adding that it was evaluating its ability to operate as a going concern.

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Missing Chinese billionaire banker Bao Fan assisting authorities in investigation, company says

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Tech dealmaker reported to be unreachable 10 days ago in latest case of a top executive going missing during Xi Jinping’s anti-corruption drive

The Chinese billionaire tech banker Bao Fan, who was reported missing 10 days ago, is cooperating with Chinese authorities conducting an investigation, a China-based boutique bank has said.

It is the first time China Renaissance Holdings has given a reason for the disappearance of its founder and chairman, though no details about the investigation were shared.

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Lloyds accused of ‘stuffing bankers’ pockets’ after proposed pay hikes for top bosses

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Chief executive Charlie Nunn could receive £9.1m payout, while top performing bankers to share £446m bonus pot for work in 2022

Lloyds Banking Group has been accused of “stuffing the pockets of already overpaid bankers” after proposing increases for top bosses that could result in a £9.1m payout for its chief executive, Charlie Nunn.

The bank revealed on Wednesday that staff would share a £446m bonus pot – the highest in four years – for their work in 2022, despite reporting flat annual profits, after an increase in the money put aside for a potential jump in defaults.

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HSBC quarterly profits more than double after interest rate rises

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Bank increases CEO’s bonus and plans bigger shareholder payout as it faces pressure from investor Ping An

HSBC has increased bonus payouts for its chief executive after fourth-quarter profits more than doubled on the back of a jump in mortgage and loan costs for its borrowers.

The London-headquartered lender said it had increased Noel Quinn’s bonus by 36% to nearly $2.2m (£1.8m), taking his overall pay to $5.5m for 2022. That compares with his $4.9m payout in 2021.

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NatWest accused of ‘unjust’ profiteering after CEO paid £5.2m

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Alison Rose becomes group’s second-highest-paid boss as bank reports largest profits since 2007

NatWest has been accused of “unjust” profiteering as it handed its boss Alison Rose a £5.2m pay package and upped its bonus pool for bankers, after the bailed out lender made its biggest profit since 2007 on the back of higher mortgage costs for customers.

The bank – which is still 44% owned by the taxpayer – revealed on Friday that Rose’s pay had soared by 46% from £3.6m a year earlier, partly because of the higher value of shares doled out as part of her long-term incentive plan.

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Chinese billionaire tech banker Bao Fan goes missing

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Disappearance of China Renaissance chair raises fears of fresh crackdown on China’s finance industry

A billionaire Chinese dealmaker has gone missing, plunging one of the country’s top investment banks into turmoil.

Bao Fan, the founder and executive director of China Renaissance, is a major figure in the Chinese tech industry and has played an important role in the emergence of a string of large domestic internet startups.

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Riots erupt in Nigerian cities as bank policy leads to scarcity of cash

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Angry protesters attack ATMs and block roads in frustration at lack of new banknotes days before election

Rioters have attacked bank ATMs and blocked roads in three Nigerian cities as anger spilled on the streets over a scarcity of cash, just days before the country’s general election.

Nigeria has been struggling with a shortage in physical cash since the central bank began to swap old bills of the local naira currency for new ones, leading to a shortfall in banknotes.

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Australia politics live: Philip Lowe says RBA ‘still unsure’ how high interest rates will go during Senate estimates grilling

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RBA boss tells Senate estimates about rationale for rate rises as Adam Bandt demands end to new coal and gas projects. Follow live

Around and around we go …

So CBA shareholders are to get a (fully franked) dividend of $2.10 for each of their share – 20% more than the last time dividends were sent out.

We reported strong financial and operational performance in our financial results for the six months ended 31 December 2022. Our cash net profit after tax of $5,153 million reflects the Bank’s customer focus and disciplined strategic execution. Our continued balance sheet strength and capital position creates flexibility to support our customers and manage potential economic headwinds, while delivering sustainable returns to shareholders. A fully franked interim dividend of $2.10 per share was determined, an increase of 20% on 1H22, driven by organic capital generation and a reduction in share count from share buy-backs. Despite the current uncertainty, your Board and management feel optimistic for the future and are committed to delivering for our customers and for you, our shareholders

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Sub-prime lender Amigo avoids £73m fine after claiming hardship

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FCA finds company put customers at high risk of harm by failing to assess whether they could repay loans

The sub-prime lender Amigo has dodged a £73m fine despite having put consumers at a “high risk” of harm, amid fears that the financial penalty could have led to its collapse.

The Financial Conduct Authority (FCA) investigation found Amigo put business interests ahead of its customers, by failing to properly assess whether customers, or their guarantors, could afford to repay loans they applied for – noting faults in both its automated tech and human oversight between November 2018 and March 2020.

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