Coffee With Greta: Banks Bounce Back
DJIA Futures: +226 (+0.7%)
SPX Futures: +26 (+0.7%)
NASDAQ Futures: +41 (+0.3%)
Good morning friends!
Futures are rising as regional bank stocks rebound.
Let’s get right to it!
First Citizens To Buy Silicon Valley Bank Assets
First Citizens Bancshares (FCNCA) shares are surging 49% ahead of the open after reaching a deal to buy Silicon Valley Bank’s deposits and loans.
The bank will purchase around $72 billion of SVB assets at a discount of $16.5 billion from regulators.
Another $90 billion in securities and other assets will remain “in receivership for disposition by the FDIC”.
The FDIC said it “received equity appreciation rights in First Citizens BancShares, Inc., Raleigh, North Carolina, common stock with a potential value of up to $500 million.”
The 17 former SVB branches that were opened as bridge banks after the collapse will open as “First-Citizens Bank & Trusty Company” today.
Regional Banks Bounce
First Republic Bank (FRC) shares are rallying 31.9% in premarket trade, leading the rebound in regional banks.
The SPDR S&P Regional Banking ETF (KRE) is up 4%.
The jump comes after several positive developments for regional banks over the weekend.
Bloomberg reported on Saturday that U.S. officials are considering expanding the federal programs that provide more liquidity to banks.
That’s reportedly meant to help First Republic while it continues to search for a buyer.
CNBC reported that the deposit inflows to large banks from smaller regional banks has also slowed significantly.
Minneapolis Fed President On Banking Crisis
Minneapolis Fed President Neel Kashkari commented on the banking crisis in an interview with CBS’ Face The Nation on Sunday, saying “it definitely brings us closer” to a recession.
Kashkari said, “What’s unclear for us is how much of these banking stresses are leading to a widespread credit crunch. And then that credit crunch, just as you said, would then slow down the economy.”
But he also expressed confidence in the strength of the banking system saying, “The banking system has a strong capital position and a lot of liquidity and has the full support of the Federal Reserve and other regulators standing behind it.”
Kashkari said it’s too early to predict how this will impact the next interest rate decision in May.
CME Group’s FedWatch Tool shows 61.3% of traders expect the bank to keep rates unchanged while 38.7% expect another 25 basis point hike.
The Fed’s preferred inflation gauge for February will be released this Friday.