Asian markets UBS, Credit Suisse; China, Debt Prime Rates

The Monetary Authority of Hong Kong and its Securities and Futures Commission declared Credit Suisse operations in the city will continue as normal after taking over UBS Bank over the weekend.

Credit Suisse’s operations in Hong Kong include a branch supervised by the HKMA and two licensed entities supervised by the SFC.

The regulators said, “Customers can continue to access their deposits with the branch and trading services provided by Credit Suisse for Hong Kong’s equity and derivatives markets.”

Regulators pointed out that “local banking sector exposures to Credit Suisse are insignificant”, adding that the Hong Kong branch’s total assets are about HK$100 billion (US$12.74 billion), less than 0.5% of its banking sector.

Shares in Hong Kong banks fell sharply on Monday morning, with HSBC down 4.37% and among the top losers on the HSI, with Standard Chartered losing 3.81%.

According to the central bank, the Bank of Japan predicts that inflation will moderate this year Summary of comments from its March meeting.

“The year-on-year rate of increase in the Consumer Price Index (CPI) is likely to moderate in mid-2023 fiscal year due to the effects of the government’s economic measures to reduce energy prices,” the report said.

While the BOJ noted that Japan’s economy remains “resilient overall,” it also expressed the need to continue its monetary policy.

“Until the price stability target of 2% is achieved, it is necessary for the Bank to continue with the current demonetisation including yield curve control,” the report said.

Japan’s CPI reading for February fell to a 42-year low of 3.3%.

– Lee Ying Shan

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

Following the announcement by UPS Group AG, Credit Suisse Group AG will continue to operate in Singapore without any disruption or restrictions, MAS said today. Credit Suisse’s customers will have full access to their accounts and Credit Suisse’s contracts will continue. Force,” said MAS Report on Monday.

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

MAS added that the two banks do not serve retail clients as their primary activities in Singapore are in private banking and investment banking.

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

After lowering the reserve requirement ratio, the People’s Bank of China kept the 1-year and 5-year lending prime rates unchanged. Last week almost all banks 0.25 percentage points.

The 1-year LPR stood at 3.65% and the 5-year LPR stood at 4.3%, both unchanged from August last year.

The offshore Chinese yuan strengthened 0.14% to trade at 6.8795, while the offshore Chinese yuan was flat, trading at 6.885 against the US dollar.

– Lim Hui Jee

America’s Mid-Sized Bank Alliance has asked regulators to guarantee all deposits for the next two years, according to a Bloomberg report.

The report cited a letter from the MBCA, which argued that Alliance Deposit Insurance would stabilize the banking sector by stopping rapid withdrawals from small banks.

The MBCA proposed that the banks themselves would finance the expanded insurance program by increasing the deposit-insurance rating, the Bloomberg report said.

The coalition’s request comes after U.S. Treasury Secretary Janet Yellen said that while the FDIC insures all deposits for Silicon Valley Bank and Signature Bank, not all depositors will be protected above FDIC insurance limits of $250,000 per account.

– Yeo Boon Bing

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– Weissen Don

There is the US Federal Reserve and five other central banks jointly announced To increase the frequency of their US dollar swap tax arrangements from weekly to daily.

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

The frequency of 7-day maturity operations will increase daily on a weekly basis and will continue from March 20 until “at least” the end of April.

In doing so, monetary authorities said the move would “serve as an important liquidity buffer to ease pressures in global financial markets, thereby helping to mitigate the effects of such strains on lending to households and businesses.”

The move comes ahead of the central bank’s two-day meeting this week to announce its intentions on interest rates.

-Lim Hui Jie, Jeff Cox

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– Javier Ong

The FDIC announced an agreement to sell “substantially all deposits and certain loan portfolios” of Signature Bank to Flagstar Bank, a subsidiary of New York Community Bancorp.

40 former branches of Signature will start operating under the Flagstar name on Monday, the company said.

The deal includes $38.4 billion in Signature’s assets, including $12.9 billion in loans purchased at a discount of $2.7 billion, the FDIC said.

However, Flagstar’s bid does not include about $4 billion in deposits related to Signature’s digital banking business. The company said that the digital bank will offer those deposits directly to customers. The FDIC has another $60 billion in loans in receivership.

— Christine Wang

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

Credit Suisse’s shares fell last week after its biggest investor, the Saudi National Bank, declined to provide additional funding. Despite subsequent moves by Credit Suisse and Swiss regulators to allay investor fears — 50 billion Swiss francs ($54 billion) including debt — Shares fell 25.5% over the weekend.

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

– Hakyung Kim

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

The central bank is expected to approve a quarter-point, or 25 basis point, increase in interest rates at its meeting next week. But market watchers say the central bank’s next decision on interest rates last week amid the banking crisis is almost certain.

“I’m hearing the same thing everyone is hearing, which is that there’s a case for going into 25 and there’s a case for skipping,” he said on CNBC’s “The Exchange.” “I think it really depends … on the state of the markets and what happens with this risk of financial instability over the next few days.”

– Alex Haring

First Republic Bank dropped another leg in afternoon trading, plunging more than 30%, as investors braced themselves for the final hours of trading this week. Friday’s nosedive sent the stock down more than 70% from where it started the week.

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