Despite the interventions to secure Credit Suisse in Europe and First Republic Bank in the United States, yesterday the financial markets experienced a new session marked by sales and the European stock exchanges closed the week with another sharp decline: Piazza Affari closed trading with a drop of 1.64%, a performance that brings the balance of a black week to -6.5% marked first by the collapse of Silicon Valley Bank and the US regional banks and then by the Credit Suisse case. Madrid lost 1.9%, Frankfurt and Paris around 1.4%, London and Zurich 1%.
The deal with Ubs
For the entire week, the Stoxx 600 dropped nearly 4% overall. On the bond side, the spread between the ten-year BTP and the Bund rose again to 193 points (from 191) while there was a marked drop in the yields on issues in euro; the Btp also went from a yield of 4.15% to 4.05%. In practice, despite all the measures undertaken by the Fed, the US Treasury, the BoE, the Swiss National Bank and the US banks to stabilize the situation, the markets continue to be in difficulty, as evident by the -8% of Credit Suisse, for the which, according to rumors of the Financial Times, we are thinking about a reorganization that provides for a total or partial acquisition by Ubs. The Swiss central bank and the market regulator Fima are orchestrating the talks.
Always according to the Financial Times BlackRock is also working on a bid for Credit Suisse. This would be a rival proposal to that of Ubs. The City newspaper reports it, quoting a person with knowledge of the dossier. There is no guarantee that the operation will go through, underlines theft, and any deal would face significant regulatory hurdles in Europe and the United States. The American investment giant is evaluating a number of options and working with other investors and may decide to bid just to some parts of the company. BlackRock reportedly communicated its intentions to Credit Suisse. Larry Fink, co-founder and CEO of BlackRock, is directly involved in the negotiation. BlackRock has long been one of Credit Suisse’s largest investment banking clients, a deal, especially for its US branch, would be one way to bring trading capability in-house, one of the sources said. Financial Times.
The hypothesis of a private equity placement
As far as Credit Suisse is concerned, the high degree of uncertainty is signaled by a portfolio of bonds for a value of at least 76 billion Swiss francs, which in the event of a public bailout would be called upon to contribute through a conversion into capital, in practice a bail -in Then there is the -24% of First Republic despite the 30 billion dollars made available by 11 American banks. In the late evening, the hypothesis of a private equity placement between other banks and private equity funds emerged and in the after hour the stock lost a further 4%.
The Silicon Valley Bank case
Also on the US side, SVB Financial Group, the parent company of Silicon Valley Bank, filed for Chapter 11 bankruptcy yesterday, a week after the bank was shut down by regulators. Silicon Valley Bridge Bank, the bank created in the wake of the federal takeover, operates independently and is not a party to the proceeding. On the foreign exchange market, the euro rose against the greenback to 1.065 dollars after Thursday’s decision by the ECB to raise rates by 50 basis points. Oil, on the other hand, fell further by around 2.7%, with Brent at 72.7 dollars a barrel and WTI at 66.9 dollars. Gas also fell by 4% at 42.5 euros per MWh. Gold, the safe haven asset par excellence, gained 6.5% in a week. From Monday there is a busy calendar of central bank meetings and rate decisions with the meetings of the Fed, Swiss National Bank, Norges Bank and Bank of England.