Banking sector drama drags on with SVB, Credit Suisse up in the air

Illustration: Gabriella Turrisi/Axios

The banking sector is poised to enter a third week of existential questions and instability despite official efforts to stabilize markets and reassure depositors.

In the meantime the search for reasons, lessons and blame is already well underway.

What we see: The fate of Silicon Valley Bank, whose financial fault lines spurred the recent banking earthquake, is still up in the air.

  • Its former parent filed for bankruptcy on Friday. The commercial bank – which was taken over by the US government last week – is not included in that process.
  • Another effort to sell the now FDIC-owned bank is underway after the regulator was unable to find a buyer last weekend.

separately, UBS is said to be exploring a deal for all or part of embattled rival Credit Suisse at the urging of the Swiss National Bank and the country’s financial regulator, the FT reports.

  • A separate report by the publication said BlackRock was evaluating the possibility of a competing bid, which the US firm rejected.
  • Credit Suisse failed to find a bottom for its shares on Friday, two days after securing its own $50 billion lifeline from the Swiss National Bank. The stock fell another 8% on Friday in Europe.

And First Republic Bank the investors run…again. Shares were lifted Thursday by news of a $30 billion lifeline. But hours later, it announced it was suspending its dividend. The stock rose another 32% on Friday.

In search of reasons, President Biden took aim at executives Friday, urging Congress to pass tougher penalties for those overseeing failed banks, Axios’ Kate Marino writes.

  • The Fed, meanwhile, said Monday it intends to review whether there were any possible regulatory or supervisory missteps that led to SVB’s collapse, Axios’ Courtenay Brown writes. Its broad review of the bank’s failure is expected on May 1.

Editor’s note: This story has been updated with additional information about Credit Suisse

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