Bank turmoil updates | As it happened: March 17, 2023

Gold prices on Friday surged over 2% on Friday amid the ongoing wave of banking crises. Spot gold climbed 2.2% to $1,960.29 per ounce, the news agency Reuters reported. 

"Gold is surging on fears that more bad banking news could appear over the weekend and hopes that the Fed will pause its rate hikes next week," Tai Wong, an independent metals trader based in New York, said.

On the other hand,  Lukman Otunuga, a senior research analyst at FXTM, said that gold is likely to shine through the chaos as investors adopt a guarded stance.

Oil prices fell in volatile trade on Friday, reversing earlier gains of more than $1 a barrel, as banking sector fears set crude on course for the biggest weekly decline in months.

According to Reuters, Brent crude futures fell by 76 cents, or 1.02%, to $73.94 a barrel, and West Texas Intermediate crude was down 52 cents, or 0.76%, at $67.83.

Supervisors at the European Central Bank (ECB) see no contagion for euro zone banks from the recent sector turmoil. The ECB held an ad hoc supervisory board meeting, its second this week, to discuss the stresses and volatility in the banking sector, the news agency Reuters reported on Friday. 

However, supervisors were told that deposits were stable across the euro zone and its Credit Suisse exposure was immaterial.

As of 1345 GMT, shares of First Republic Bank were down around 21 per cent on early Friday as Wall Street opened lower as a sign of persisting worries despite the $30 billion rescue, as per AFP. 

First Republic Bank's shares fell 13 per cent in pre-market trading on Friday (March 17) despite the $30 billion in deposits from several United States banks as part of a rescue package, reported Reuters. 

The Governor of the Reserve Bank of India (RBI), Shaktikanta Das, on Friday (March 17) said Indian banking system remains stable and resilient amid banking crisis in the United States and Europe.

The RBI governor said that the country's financial sector is "stable" and "worst of the inflation is behind us". He added, "Our external debt is manageable, so dollar rise does not pose any problem to us." 

The Silicon Valley Bank (SVB) Financial Group has filed for a court-supervised reorganisation under Chapter 11 bankruptcy protection, on Friday (March 17) as it scrambles to seek buyers for its assets. This comes days after its former unit Silicon Valley Bank was taken over the United States regulators. 

The company had also previously mentioned that are planning to look at strategic alternatives for its businesses which included SVB Capital and SVB Securities. However, the two aforementioned holding companies' funds and general partner entities are not a part of the recent filing, said the company, as per Reuters. 

Credit Suisse shares dropped again on Friday, sinking nearly eight per cent in morning trade on the Swiss stock exchange despite the $54 billion central bank lifeline aimed at restoring investor confidence, according to AFP.

Shares in Switzerland's embattled second-biggest bank were down 7.9 per cent just after midday at 1110 GMT, trading at 1.86 Swiss francs a share.

The Bank of Japan, Finance Ministry and Financial Services Agency are expected to meet for the first time since September on Friday evening to discuss markets after the collapse of Silicon Valley Bank.

Though government has so far played down the likely impact of the failure of regional US banks, the potential meeting points to concern over the fallout of recent financial-sector turbulence that has also hit Credit Suisse Group AG, reports Bloomeberg.

With the failure of American banks and the problems at Credit Suisse, requests to transfer money across institutions have increased at British banks as well.

UBS Group AG and Credit Suisse Group AG are averse to such steps, even when financial stability leaves no other choice except a forced combine, according to Bloomberg, which cited people familiar with the situation.

According to sources cited by Bloomberg, UBS would concentrate on its own wealth-centric independent strategy and is not convinced to take on risks associated to Credit Suisse.

Goldman Sachs reduced its estimate for an interest rate increase by the European Central Bank (ECB) in May to 25 basis points after the central bank hiked rates to combat inflation amid demands to slow down policy tightening on Thursday. The ECB increased rates by 50 basis points. The investment bank lowered its estimate from the first projection by 50 basis points, which caused it to lower its ECB terminal rate forecast from 3.75% to 3.5%. Once the ECB increased interest rates by 50 basis points on Thursday, the projection was updated, as reported by the Mint.

The dollar slipped on Friday as authorities and banks moved to ease stress on the financial system. Multi-billion dollar lifelines for troubled US and European banks eased pressure on major currencies that tumbled this week in the wake of bank turmoil.

Action to rescue First Republic Bank in the US on Thursday boosted risk appetite globally on Friday. Surges were seen in the Australian and New Zealand dollars.

Swiss bank Credit Suisse has been sued by its US shareholders who claim that they have been deceived by the bank. Shareholders have alleged that the bank defrauded them by failing to disclose that it was suffering from "significant" customer outflows, and that it had material weaknesses in its internal controls over financial reporting.

As the Silicon Valley Bank's collapse continues to have effects on the banking sector, new reports say that Indian startups had deposits worth about $1 billion with the bank. Country's deputy IT minister has suggested that local banks lend more to them going ahead.

California banking regulators shut down Silicon Valley Bank (SVB) on March 10 after a run on the lender, which had $209 billion in assets at the end of 2022.

"The issue is, how do we make startups transition to the Indian banking system, rather than depend on the complex cross border U.S. banking system with all of its uncertainties in the coming month?" India's state minister for technology, Rajeev Chandrashekhar said late Thursday night in a Twitter spaces chat.

Indian shares saw an upsurge on Friday, tracking a rebound in global equities following a slew of measures to support the global banking system. The Nifty 50 index was up 0.44 per cent at 17,059.80, while the S&P BSE Sensex rose 0.38 per cent to 57,854.28 as of 10:49 am IST.

The rise came on the heels of a sharp rebound in the US and European markets on Thursday on news that a large group of banks was infusing cash into US lender First Republic Bank alongside a lifeline from Swiss National Bank to Credit Suisse.

The largest banks in the United States on Thursday moved to rescue the First Republic, easing growing fears that the regional lender may be next to fall after some recent collapses which include Silicon Valley Bank.

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On Friday, Asian stock markets edged up after European lender Credit Suisse announced plans to strengthen its cash position. The move as per reports is an attempt towards avert a banking crisis.

Japan's Nikkei as per data published by Reuters rose by 0.5 per cent after trading opened, while the Shanghai Composite Index started up 0.6 per cent at 3245.26 points. Hong Kong's Hang Seng Index surged 1.2 per cent.

South Korea's benchmark KOSPI opened up 0.4 per cent to 2,387.02 points as of 0024GMT.

Australian shares opened up slightly higher, with the ASX 200 opening at 6,965.50 points.

Multi-billion dollar lifelines for troubled US and European banks shored up investor confidence on Friday and bolstered sentiment in battered stocks, although concerns now centre on whether a global financial crisis has been fully averted.

Large US banks injected $30 billion in deposits into First Republic Bank on Thursday, swooping in to rescue the lender caught up in a widening crisis triggered by the collapse of two other mid-size US lenders over the past week.

The package came less than a day after Swiss bank Credit Suisse clinched an emergency central bank loan of up to $54 billion to shore up its liquidity, which went some way to calming panic about a global banking crisis.