The international markets weigh the events of the weekend and are shown in green, after the joint statement of the main central banks.
By Marcos Phillip
20/03/2023 – 10,50hs
After the rescue of the First Republic Bank and the purchase of Credit Suisse over the weekend – which will now pass into the hands of the UBS for US$3.200 million-, international markets operate with slight gains, although investors still fear more bankruptcies or bank bailouts, so the market remains on alert.
Over the weekend, the acquisition of the bank was announced Swiss credit, by UBS, its main competitor, a purchase that included the active participation of the Swiss government. The agreement prompted a joint statement between the US Treasury Secretary, Janet Yellen, and the Fed Chairman, Jerome Powell, in which they offered their support and highlighted the soundness of capital and liquidity of the US banking system.
Likewise, there was a joint communication between the Fed and the central banks of Canada, Europe, Japan, England and Switzerlandto extend the liquidity of dollars in these markets, whose operation will last until the end of April, at least, and whose main objective was to calm the banking sector and facilitate liquidity in dollars.
In this context, Wall Street it operates with a mixed trend and the main European stock markets register a positive trend: the CAC40 of France advances 1.20%; the German DAX rises 0.93%; the Spanish Ibex gains 0.76%; and the FTSE 100 of the United Kingdom does it at 0.62%.
Markets awaiting UBS’s purchase of Credit Suisse
Although these developments seemed to buoy investor confidence, the news left many doubts after the setback that some US bondholders Swiss credit could suffer with the acquisition of UBS. Under the deal, the Swiss regulator decided that Credit Suisse’s additional Tier 1 bonds — or AT1 bonds — with a notional value of $17 billion will be valued at zero, worrying some of the debt holders who they thought they would be better protected than shareholders in the takeover deal announced Sunday.
Markets awaiting UBS’s purchase of Credit Suisse
This whole scenario is added to the problems that still persist in the US banking sector, where bank actions remain under maximum pressure despite the initiative of the “mega banks” to deposit 30,000 million dollars in First Republic Bank, institution shaken by the falls of Silicon Valley and Signature Bank.
On Sunday, S&P Global downgraded the credit rating of First Republiput it in the “junk” category, saying that deposit injections might not solve its liquidity problems. He also worries about what happens next at Credit Suisse and what that means for investors, customers and employees.
So the papers Swiss credit fall sharply 48% this Monday, while the shares of First Republic Bank they fall back close to 14%, with investors who continue to “punish” their prices after the collapse of Silicon Valley Bank y Signature Bank.
