Silicon Valley Bank collapse | Financial stocks on losing streak, other top banks gain new clients

Japan's premier Softbank saw a decline of more than three per cent in fortunes in the first hour of the trade. Mitsubishi Ufj Financial Group down was down 6.92 per cent. Nomura fell 4.6 per cent. 

As of last reports, Brent crude futures was trading 0.49 per cent lower to $80.32 a barrel. Meanwhile, US West Texas Intermediate stood at $74.35 a barrel, losing 0.6 per cent. 

“Oil prices fall on market fall-out from the US Silicon Valley Bank collapse. A stronger than expected US CPI data report tonight will put further downward pressure to near term prices," wrote National Australia Bank in a daily note. 

SVB was one of the largest vendors in the startup ecosystem, providing funding to up-and-coming enterprises. For several years, Indian startups had SVB as their preferred choice of banking, primarily due to the absence of regulatory hassle and flexibility in the payment system. 

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Other large banks in the United States such as JPMorgan Chase & Co and Citigroup Inc are reportedly filled with requests from lenders for cash transfer, reported Reuters citing a Financial Times report.

The crisis has also led to fall in shares of regional banks of the USA such as First Republic Bank , Western Alliance and KeyCorp.

Silicon Valley Bank collapse: A central bank scrambling for buyers, a prime minister onboard a 15-hour long flight meeting key financial functionaries, volatile market and stunning global uncertainty — all this went behind the scenes to manage the chaos that SVB's collapse in the United States stoked for the rest of the world. 

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The dramatic implosion of Silicon Valley Bank (SVB) last week could reportedly bring the Federal Reserve's current cycle of interest rate hikes to an end far sooner than expected by analysts. 

As per AFP, traders and analysts who had previously predicted that the Fed would increase the pace of hikes to tackle inflation have now dialled back their expectations. Some are even saying that the US central bank will hold its benchmark rate next week due to the troubles in the banking sector.

Credit Suisse group's Auditor General says there were "material weaknesses" in the banks reporting procedures. During 2022 and 2021, "the group’s internal control over financial reporting was not effective," said the bank in its annual report released Tuesday.

"Management has also accordingly concluded that our disclosure controls and procedures were not effective," it added.

The material weaknesses reportedly relate to the failure to design and maintain effective risk assessments in its financial statements.

As Credit Suisse reports its worst annual performance since the 2008 financial crisis, the banks Chairman Axel Lehmann has decided to forego a payment of 1.5 million Swiss francs ($1.6 million) for his first full year on the job. 

As per the bank’s compensation report as cited by Bloomberg, Lehmann, who took over the role last year in January will not receive the standard fee that’s usually paid on top of board members’ salaries.

The dollar was languishing near a multi-week low on Tuesday following the Silicon Valley Bank collapse. There are fears of a broader systemic crisis following the crisis in the banking industry. US tech-focused lender left traders speculating that the Federal Reserve could pause its aggressive rate-hiking cycle. The dollar rose to an intraday peak of 134.03 yen and was last 0.48 per cent higher at 133.87, reversing some of Monday's 1.4 per cent slide.

Following Silicon Valley Bank's collapse, Moody’s Investors Service has placed First Republic Bank and five other US lenders on review for downgrade. The five other banks are -- Western Alliance Bancorp., Intrust Financial Corp., UMB Financial Corp., Zions Bancorp. and Comerica Inc. The US government rescued SVB’s depositors, but the incident has hit US bank stocks.

Shareholders sued SVB Financial Group and two top executives on Monday, accusing them of hiding information about how rising interest rates would leave its Silicon Valley Bank unit. The bank failed last week, causing worldwide chaos. The proposed class action against SVB, Chief Executive Greg Becker and Chief Financial Officer Daniel Beck was filed in the federal court in San Jose, California.

The Indian rupee declined against the US dollar on Tuesday, as did its Asian peers. This follows concerns that the collapse of the Silicon Valley Bank (SVB) could have broader consequences. The rupee was at 82.4150 to the dollar by 11:02 am IST, down from 82.3850 in the previous session. It opened at 82.27.

The Silicon Valley Bank collapse has triggered massive upheaval in financial markets across the world. Global financial stocks have lost $465 billion in market value in two days. Investors have been cutting exposure to lenders from New York to Japan in the wake of SVB's collapse.

Losses widened Tuesday, as MSCI Asia Pacific Financials Index dropped as much as 2.7 per cent to the lowest since November 29. Mitsubishi UFJ Financial Group Inc. slid as much as 8.3 per cent in Japan. South Korea's Hana Financial Group Inc. fell 4.7 per cent.

Indian shares were holding at a near five-month lows Tuesday that were hit in the previous session following the US banking crisis. The Nifty 50 index was down 0.2 per cent to 17,127, while the S&P BSE Sensex dropped 0.14 per cent to 58,158.09 as of 09:20 am IST.

The fallout from the collapse of US lenders Silicon Valley Bank and Signature Bank widened overnight despite government efforts to shore up confidence, hitting bank shares globally.