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2 hours ago

Government intervention in Silicon Valley Bank ‘not a bailout’: Pershing Square’s Ackman

The US government’s intervention in the Silicon Valley Bank collapse is “not a bailout,” according to Bill Ackman, founder and CEO of hedge fund Pershing Square Capital Management.

In a tweet, Ackman explained that in this event mainly shareholders and bondholders of the banks will be affected, and the losses will be absorbed by the Federal Deposit Insurance Corporation̵[ads1]7;s insurance fund.

This is in contrast to the financial crisis in 2008, where the US government injected taxpayers’ money in the form of preferred shares in the banks, and the bondholders were protected.

“A lot of people who screwed up had minimal or no consequences. There were bailouts,” Ackman wrote.

In this case, “the people who screwed up will bear the consequences. The investors who did not adequately supervise their banks will be wiped out and the bondholders will suffer a similar fate,” he added.

Had regulators not intervened, Ackman opined that the U.S. would have seen “a 1930s bank run continue as early as Monday, causing enormous economic damage and hardship to millions.”

— Lim Hui Jie

An hour ago

Agri-tech startup CEO says they will continue their business with Silicon Valley Bank

Agri-tech startup Harvesting Farmer Network’s chief executive said the firm will continue banking with Silicon Valley Bank (SVB) after the US announced plans to freeze depositors of the bank.

Ruchit Garg, founder and CEO of the India-based mobile marketplace for farmers, told CNBC’s “Squawk Box Asia,” that U.S. regulators “have been working very hard, very quickly to make sure that small depositors like us get our money back.”

“It gives me a lot of confidence to keep the money with one of the biggest banks,” he said. — We continue with SVB.

Harvesting Farmer Network has “a very limited exposure” to SVB, Garg said.

He said the firm’s primary business is in India and much of its money is placed in Indian banks.

“Compared to a lot of other companies, we’re very secured in a very, very good position right now,” he said.

He added that any depositor should diversify across several banks, as the SVB fallout could happen to all banks.

– Sheila Chiang

4 hours ago

SM Entertainment shares fall nearly 20% after Hybe drops takeover offer

Shares in South Korean entertainment company SM Entertainment fell nearly 20% after rival Hybe announced it would withdraw its takeover bid over the weekend.

In a statement on Sunday, Hybe – the company behind K-pop sensation BTS – said it made the decision “after observing that the market has shown signs of overheating due to competition from both Kakao and Kakao Entertainment.”

It added that “this acquisition, together with the tender offer, could harm shareholder value, and cause the market to overheat, in making the decision.”

This is the latest move in a very public battle between Kakao and Hybe over SM Entertainment that started in February.

Meanwhile, shares of Hybe rose 1.91%, and Kakao’s shares rose 1.38% on Monday morning.

— Lim Hui Jie

4 hours ago

Goldman Sachs no longer sees any argument for the Fed to raise interest rates in March

Goldman Sachs no longer sees a case for the Federal Reserve to deliver a rate hike at the Federal Open Market Committee meeting next week, economist Jan Hatzius said in a Sunday note.

“Given the stress in the banking system, we no longer expect the FOMC to deliver a rate hike at its next meeting on March 22,” Goldman Sachs said in a note.

Hatzius and a team of economists added that they still expect to see 25 basis point increases in May, June and July, reiterating their expectation of a terminal rate of 5.25% to 5.5%.

– Jihye Lee

4 hours ago

SVB fallout will not hurt Asian banks as their deposits are in loans, says Moody’s

Asian banks will not be affected by the collapse of Silicon Valley Bank since most of their deposits are in loans – not in Treasurys, according to Moody’s Investors Service.

“If you look at the typical loan-to-deposit ratio in Asia, it’s about 90%, so most deposits are invested in loans,” Eugene Tarzimanov, a vice president at Moody’s told CNBC’s “Squawk Box Asia.”

“Banks obviously invest in government securities – local bonds, foreign bonds, but that proportion is not that significant.”

Tarzimanov also noted that Asian banks are resilient because of their “strong capital, good quality of loan books, and most importantly, good funding and liquidity.”

– Sumathi Bala

5 hours ago

Silicon Valley Bank’s China Venture Says Balance Sheet Is ‘Independent’

The Chinese joint venture of shuttered Silicon Valley Bank said its operations have been “independent and stable” amid the collapse of its US parent last week

SPD Silicon Valley Bank is a 50-50 joint venture between Silicon Valley Bank and Shanghai Pudong Development Bank.

The bank said in a statement on its website that it “has always operated in a stable manner in accordance with Chinese laws and regulations, with a standard governance framework and independent balance sheet.”

“As China’s first technology bank, SPD Silicon Valley is committed to serving Chinese science and technology companies, and always follows Chinese regulations for stable operation,” the bank added.

— Lim Hui Jie

5 hours ago

Biden tweets that regulators have reached a “solution” that protects the US financial system

President Joe Biden tweeted that US regulators have reached a “resolution” regarding issues related to Silicon Valley Bank and Signature Bank.

“The American people and American businesses can have confidence that their bank deposits will be there when they need them,” he said in a Twitter thread.

“I am firmly committed to holding those responsible for this mess fully accountable and continuing our efforts to strengthen oversight and regulation of major banks so we are not in this position again,” Biden wrote in a tweet.

– Jihye Lee

5 hours ago

CNBC Pro: Shares of Little-Known Global Chips Firm Set to Rise 50%, Barclays Says

Shares of a UK-based technology company that designs custom chips and semiconductors are expected to rise more than 50% over the next 12 months, according to Barclays Equity Research.

The investment bank said a fast-growing data center space would “drive sales and profit growth faster than other companies in our coverage.”

CNBC Pro subscribers can read more about the semiconductor stock here.

– Ganesh Rao

5 hours ago

CNBC Pro: ‘Extraordinary growth’: Citi reveals its top 4 stocks in renewables right now

The world is going through a “rapid and transformational change” when it comes to energy, Citi said, naming four buy-rated stocks as “top picks” in the space.

CNBC Pro subscribers can read more here.

— Weizhen Tan

6 hours ago

Silicon Valley Bank fallout unlikely to affect growth outlook for Asia: Goldman Sachs

Goldman Sachs’ Asia-Pacific chief economist Andrew Tilton said the region’s economic outlook is unlikely to be affected by the fallout from Silicon Valley Bank’s collapse.

“To the extent that this is addressed relatively quickly by regulators and does not spread to more entities beyond those that have been listed so far, then it is less likely that we will see a significant impact on the Asia growth outlook,” Tilton told CNBC. “Squawk Box Asia.”

He repeated the firm’s forecast for China’s economy, stressing that it will be mostly driven by the reopening after the zero-Covid policy.

“We continue to expect 5.5% growth for China this year, driven mainly by the reopening and likely less sensitive to this particular issue,” Tilton said.

– Jihye Lee

6 hours ago

Dick Bove says depositors have lost faith in American banks

Veteran banking analyst Dick Bove said U.S. banks have lost credibility with average investors because of what he described as “accounting gimmicks,” he told CNBC’s “Squawk Box Asia.”

“The accounts of the banking system in the United States are rubbish,” he said. Banks use “accounting gimmicks to avoid indicating what the true equity is in these banks,” he added.

Bove further noted that the problems surrounding the collapse of Silicon Valley Bank were led by Federal Direct Loans.

“They have $110 billion in investments in U.S. government-backed securities, government bonds, mortgage-backed securities,” he said. “It’s not the loans that created the problem, it’s the US-backed securities that created the problem.”

– Jihye Lee

8 hours ago

Regulatory backstop for SVB failure aimed at protecting economy, officials say

Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and FDIC Chairman Martin J. Gruenberg issued a joint statement Sunday night explaining their rationale for drafting a plan to stop depositors and protect financial institutions with Silicon Valley Bank money.

“We are taking decisive action to protect the American economy by strengthening public confidence in our banking system,” the statement said. “This step will ensure that the U.S. banking system continues to perform its important roles of protecting deposits and providing access to credit to households and businesses in a way that promotes strong and sustainable economic growth.”

Silicon Valley Bank fell on Friday, marking the biggest bank failure since the financial crisis of 2008. This then raised concerns for other banks that could see similar risks.

“The U.S. banking system remains resilient and on solid footing, in large part because of reforms made after the financial crisis that ensured better protections for the banking industry,” the officials said in a statement.

“These reforms combined with today’s actions demonstrate our commitment to taking the necessary steps to ensure depositors’ savings remain safe,” they added.

— Fred Imbert

8 hours ago

Cryptocurrencies jump with stock futures, even after Signature Bank shutdown

Crypto climbed with stocks as US regulators unveiled a plan to ensure Silicon Valley Bank depositors would get their money after the bank’s spectacular collapse on Friday.

Bitcoin and ether each jumped about 7% after 6:30 p.m. ET, according to Coin Metrics.

The moves came even as New York’s Signature Bank was shut down by the New York State Department of Financial Services on Sunday, according to a joint statement from the Treasury, Federal Reserve and FDIC.

Signature Bank was another well-known crypto-friendly institution and the second largest next to Silvergate, which announced its impending liquidation last week.

Its shutdown raises fears among crypto-investors and entrepreneurs that the industry will be removed from the US banking system, leaving it without “on-ramps” that allow fiat money to flow into crypto-assets. Silvergate and Signature helped solve this problem by creating simple banking and payment platforms for crypto companies.

Wall Street analysts on Friday had maintained buy ratings on Signature Bank, despite the bad news about its peers earlier in the week.

– Tanaya Machel

8 hours ago

Futures jump after regulators announce backstop for SVB depositors

Futures extended their gains just before 6:30 p.m. ET after U.S. regulators unveiled a plan to stem the damage from the collapse of Silicon Valley Bank.

Dow futures were last higher by 297 points, or 0.9%. S&P 500 futures rose 1.1% and Nasdaq Composite futures rose 1.2%.

– Tanaya Machel



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