Asia markets UBS and Credit Suisse; China, home loan rates

The Hong Kong Monetary Authority and its Securities and Futures Commission announce Credit Suisse’s operations in the city will continue as normal, following the takeover of the embattled bank by UBS over the weekend.

Credit Suisse’s operations in Hong Kong consist of a subsidiary supervised by HKMA and two authorized firms supervised by the SFC.

“Customers can continue to access their deposits through the branch and trading services that Credit Suisse provides to the stock and derivatives markets in Hong Kong,” the regulators said.

“The local banking sector’s exposure to Credit Suisse is minimal,” the regulators noted, adding that the Hong Kong branch’s total assets amounted to about HK$100 billion (US$12.74 billion), accounting for less than 0.5% of its banking sector.

Hong Kong bank shares fell sharply on Monday morning, with HSBC losing 4.37% and being one of the biggest losers in HSI, while Standard Chartered lost 3.81%.

The Bank of Japan expects inflation to slow this year, according to the central bank Summary of opinions from the March meeting.

“The rate of year-on-year increase in the Consumer Price Index (CPI) is likely to slow towards the middle of fiscal 2023 due to the effects of lower energy prices from government economic measures,” the report said.

While the Bank of Japan noted that the Japanese economy was “generally resilient,” it also expressed the need to continue its monetary easing policy.

“In order for the price stability target of 2% to be sufficiently achieved, it is necessary for the Bank to continue the current monetary easing, including yield curve control,” the report stated.

Japan’s February CPI reading slowed from a 42-year high to 3.3%.

– Lee Ying Chan

The Monetary Authority of Singapore (MAS) said on Monday that UBS’ takeover of troubled rival Credit Suisse is not expected to affect the stability of Singapore’s banking system.

“MAS said today that Credit Suisse Group AG will continue to operate in Singapore without interruption or restrictions, following the announced acquisition by UBS Group AG. Credit Suisse clients will continue to have full access to their accounts and Credit Suisse’s contracts with counterparties will remain in force,” said MAS. , in statement on monday.

“The acquisition is not expected to have an impact on the stability of the banking system in Singapore,” Maas said.

Maas added that both banks do not serve retail clients, as their primary activities in Singapore are in private banking and investment banking.

The Straits Times Index was down 0.58% in early trade. DBS Bank shares rose 0.15% while OCBC Bank and UOB shares fell 0.49% and 0.18%, respectively.

The People’s Bank of China left the main interest rates for the 1-year and 5-year loan unchanged, after lowering the required reserve ratio for Almost all banks rose 0.25 percentage points last week.

The 1-year LPR remained at 3.65% while the 5-year LPR remained at 4.3%, both unchanged since August last year.

The offshore Chinese yuan rose 0.14% to trade at 6.8795, while the onshore Chinese yuan stabilized, trading at 6.885 against the US dollar.

– Lim Hwi Ji

The Alliance of American Midsize Banks has asked regulators to guarantee all deposits for the next two years, according to a Bloomberg report.

The report cited a letter from MBCA, in which the alliance argued that deposit insurance would stop rapid withdrawals from smaller banks, stabilizing the banking sector.

MBCA suggested that the banks themselves would finance the expanded insurance program by increasing the valuation of deposit insurance, the Bloomberg report said.

The alliance’s request comes after US Treasury Secretary Janet Yellen said not all depositors would be protected by FDIC’s $250,000-per-account insurance limit, despite FDIC insuring all deposits for Silicon Valley and Signature Bank.

– Yoo Bon Bing

The technology sector was a bright spot last week as the banking crisis rocked the markets.

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– Wizen tan

The US Federal Reserve along with five other central banks have them jointly announced To increase the frequency of USD swap line arrangements from weekly to daily.

The five central banks are the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank.

The frequency of operations with a maturity of 7 days will increase from weekly to daily, starting March 20 and continuing until “at least” the end of April.

In doing so, the monetary authorities said the move “will serve as an important liquidity pillar to ease pressures in global financing markets, and thus help mitigate the effects of such pressures on the provision of credit to households and businesses.”

The move comes ahead of the Federal Reserve’s two-day meeting this week and announcing its interest rate intentions.

– Lim Hwi Ji, Jeff Cox

The opportunity in global electric vehicles is enormous, with the European market alone set to be worth $300 billion by 2030, Bernstein estimates.

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– Xavier Ong

The Federal Deposit Insurance Corporation (FDIC) announced a deal to sell “substantially all deposits and certain loan portfolios” from Signature Bank to Flagstar Bank, a subsidiary of New York Community Bancorp.

The agency said the 40 former Signature subsidiaries will begin operating under the Flagstar name on Monday.

The agreement involves $38.4 billion in Signature assets, including $12.9 billion in loans that the FDIC said was purchased at a discount of $2.7 billion.

It said, however, that Flagstar’s bid did not include the $4 billion in deposits related to Signature’s digital banking business. The agency said it will provide these deposits directly to digital banking customers. The FDIC also said about $60 billion in loans would remain in custody.

– Christine Wang

UBS has finalized an agreement to buy rival Credit Suisse for $3.2 billion. Swiss regulators played a key role in facilitating the deal in an effort to quell a contagion threatening the banking sector.

Credit Suisse witnessed a decline in its shares last week after the largest investor, the Saudi National Bank, refused to provide additional financing. Despite subsequent actions from Credit Suisse and Swiss regulators to assuage investor fears – Including a loan of up to 50 billion Swiss francs ($54 billion) – Shares fell 25.5% by the end of the week.

Under the deal, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held. According to UBS, the joint bank will have $5 trillion in invested assets.

– Hakyung Kim

The Fed’s decision on whether or not to raise interest rates by 25 basis points at next week’s policy meeting may depend on what happens in the coming days, said Nick Timeraus, chief economics correspondent for The Wall Street Journal.

The Fed is expected to agree to raise interest rates by a quarter point, or 25 basis points, at its meeting next week. But market watchers say the central bank’s next decision on interest rates has become less certain over the past week amid the banking crisis.

“I hear the same thing that other people are hearing, that there is a case to be made for turning 25, and there is a case to be made for skipping,” he said on CNBC’s “The Exchange.” “I think it really depends… on what happens with the state of the markets and this risk of financial instability over the next few days.”

– Alex Haring

First Republic Bank slipped in the afternoon, dropping more than 30% as investors positioned themselves for the final hour of trading this week. Friday’s drop sent the stock down more than 70% from where it started the week.

The decline also affected the SPDR S&P Regional Banking Index ETF (KRE), which fell 6% on Friday and is poised for a weekly loss of more than 14%.