FirstFT: Banks scramble to reassure investors and regulators

Happy St Patrick’s day. Struggling banks on both sides of the Atlantic are unlikely to be in a festive mood as they continue to dominate the headlines.

In Europe, Credit Suisse shares closed yesterday 11 per cent below where they started on Wednesday despite a $54bn lifeline from Switzerland’s central bank. Our in-depth read discusses the lender’s remaining options should deposits keep getting pulled.

In the US, the country’s largest banks are set to deposit $30bn into First Republic to prevent further chaos after the collapse of Silicon Valley Bank.

Here’s what I’m keeping tabs on today:

• Economic data: The OECD publishes its interim outlook on the global economy, while the Bank of England and Ipsos release results from a survey on public attitudes to UK inflation. The EU has its consumer price index for last month.

• Bank of Russia: The central bank holds its rate-setting meeting. Last month, it raised its key interest rate to a five-year high of 9.5 per cent.

• UK politics: The Liberal Democrats open their spring conference in York.

Have a great weekend, and thank you for reading FirstFT.

Today’s top news

1. The largest US banks are depositing $30bn into First Republic Bank in an attempt to bolster its finances and contain the fallout from the collapse of Silicon Valley Bank. Here are the financial institutions involved in the deal.

• The ‘three Js’: US Treasury secretary Janet Yellen, JPMorgan chief Jamie Dimon and Federal Reserve chair Jay Powell pieced together the rescue deal over multiple calls.

2. Credit Suisse’s bonds were left firmly in distressed territory even after the lender turned to the Swiss central bank for support and said it would buy back SFr3bn ($3.2bn) in debt. Read more on why the losses came despite a rebound in its shares.

• The FT View: Different banking woes on both sides of the Atlantic underscore the febrility of financial markets, where crises are ones of confidence, writes the Financial Times editorial board.

3. EXCLUSIVE: Carl Icahn has urged the Fed to keep fighting the inflation “disease” ahead of its rate-setting meeting next week, despite SVB and other banking failures. Read the rest of the activist investor’s comments to the FT.

• Opinion: SVB shows why we should worry about “cool” banks that forget the dull but important job of risk management, writes Anne-Sylvaine Chassany.

4. The UK is falling behind rivals in attracting investment for electric vehicles, warns Bentley chief executive Adrian Hallmark, adding that other regions, particularly the US with its green subsidies, are offering more to support the car sector’s green transition.

5. Germany’s last-minute decision to block a ban on new combustion engines is triggering others in Europe to similarly raise objections in a bid to shield their industries. Here’s how the pushback is threatening the EU’s ambitious climate agenda.

How well did you keep up with the news this week? Take our quiz.

News in-depth

For investors, it is Credit Suisse’s unprofitable business model rather than its liquidity that is the fundamental problem — a concern that would be exacerbated if clients continued to pull out assets. What would come next? The options on the table range from spinning off its Swiss unit to dissolving the bank.

We’re also reading . . . 

• Musk’s Twitter: The billionaire’s lieutenants have upended the company by identifying who to fire, refusing to pay vendors and renegotiating down bills.

• Pension changes: Here’s how you can make the most of the tax changes announced in UK chancellor Jeremy Hunt’s Budget.

• Iran politics: Former crown prince Reza Pahlavi, the exiled son of Iran’s last shah, has emerged as a figurehead for those who think regime change is near.

Graphic of the day

Investors have funnelled more than $120bn to US money market funds over the past week, the highest weekly inflow since 2020, amid concerns over the safety of some bank deposits after the collapse of Silicon Valley Bank and Signature Bank.

Take a break from the news

It hasn’t been serviced in 86 years and its dial has been shamelessly scratched, but that probably won’t prevent this Patek Philippe Ref 96 Quantième Lune moonphase watch from fetching more than $1mn when it crosses the block at the auction house Phillips later this year. Yes it’s ultra-rare, but equally significant is who it belonged to.

Additional contributions by Gordon Smith and Emily Goldberg