Financial Industry 07 (Jul 18 - Dec 24)

[winston]

Banks are short more than $1 trillion in capital, says this analyst, who fears the shortfall will only get worse

by Steve Goldstein

If bank assets are marked to market, the U.S. sector is insolvent, according to an independent analyst.

Source: Market Watch

https://finance.yahoo.com/m/e962bad5-df ... han-1.html

[winston]

CN Reportedly Orders 4 Major State-owned Banks to Provide Offshore Loans to Aid Developers' Debt Repayment

Chinese regulators issued "window guidance" to the four major state-owned banks, demanding them to issue offshore loans by next Saturday (10th), which will be secured against domestic assets, to help property developers repay their overseas debt, Reuters citied sources.

From a balance-sheet perspective, CIFI HOLD GP(00884.HK) , COUNTRY GARDEN (02007.HK), LONGFOR GROUP (00960.HK), MIDEA REAL EST (03990.HK) and SEAZEN (01030.HK) will likely be considered as eligible to receive such financial support, the sources divulged.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... t-news/HK6

[winston]

Global banking sector credit losses to be US$2.1 trillion to end-2024, says S&P

by Surin Murugiah

Its base case sees higher but manageable credit losses ahead for banks across the globe.

China's commercial banking system accounts for just more than one-half of this total.

The Chinese banking system is approximately the same size as the U.S., Japanese, German, and U.K. banking systems combined.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... 24-says-sp

[behappyalways]

There is a second plausible theory: this year’s aggressive Fed tightening has generated substantial losses on banks’ securities portfolios. As reflected in AOCI, where changes in the market value of bonds in AFS portfolios are captured, US banks have cumulatively lost ~$770bn YTD (Exhibit 5). These losses, while unrealized, have significantly reduced banks’ equity, and in some cases reduced to a level such that tangible common equity has fallen into negative territory. This is the case particularly among smaller banks. Based on S&P data, JPMorgan found that ~30 banks, most of which have total assets of <$1bn, reported negative tangible common equity as of 3Q22, an increase from 11 banks in 2Q22, and 0 banks in 1Q22.

Spike In Fed Discount Window Usage Hints At Looming Bank Crisis
https://www.zerohedge.com/markets/spike ... ank-crisis

[behappyalways]

Credit Loss Provisions Soar As Banks Brace For Pain
https://www.zerohedge.com/markets/credi ... brace-pain

[behappyalways]

HBSC And JPMorgan Tighten Belts, As Layoffs And Bonus-Slashing Continue Across Wall Street
https://www.zerohedge.com/markets/hbsc- ... theme-wall

[winston]

HK Strategy – Lifting HK banks to Neutral

HK banks results were mixed with provisions being the key swing factor. However, stronger capital positions & the focus on return on capital were positive surprises.

Overall, banks have benefited from higher net interest income (NII) but partly being offset by provisions.

Overall, HK banks are likely to benefit from more aggressive Federal Reserve (Fed) rate hikes expectations in the near-term.

Rising interest rates should support net interest margin expansion (NIM) & hence, NII growth.

In this results announcement season, there has been an increasing focus on return on capital in share buybacks & dividend.

We lift HK banks from “Underweight” to “Neutral” amid increasing recession risks in the developed market in 2H23 which would warrant a more disciplined and flexible stance.

Among HK banks, we prefer Standard Chartered Bank (SCB, 2888 HK, Fair value HKD77) which has relatively less exposure to UK & Europe as well as Bank of China HK (BOCHK, 2388 HK, Fair value HKD36.5) which is trading at a relatively more attractive valuations among HK domestic banks.

Source: OCBC

[winston]

Silicon Valley Bank shoots self in foot

by Connie Loizos

Silicon Valley Bank lost $1.8 billion in the sale of U.S. treasuries and mortgage-backed securities that it had invested in, owing to rising interest rates.

The bank is also contending with shrinking customer deposits, given that its customer base of largely startups has far less money right now to park at a financial institution.

Because it’s in this spot, it decided to raise a bunch of money to safeguard its business. The plan was to sell $1.25 billion of its common stock to investors, $500 million in convertible preferred shares, and $500 million of its common stock in a separate transaction to the private equity firm General Atlantic.

At the end of the market close yesterday, they put out a convoluted press release that was received so badly that it was almost comical.

Except that Silicon Valley Bank is a trusted financial partner to many startups and venture firms that are now nervously scrambling to figure out what to do.

Source: Tech Crunch

https://techcrunch.com/2023/03/09/silic ... f-in-foot/

[winston]

Two U.S. Banks Collapse in 48 Hours. Which One's Next?

Silvergate served the cryptocurrency industry, while SVB was the bank for Silicon Valley tech startups.

by LUC OLINGA

Source: The Street

https://www.thestreet.com/technology/tw ... 27s%2BNext?

[winston]

How a bank run closed SVB and where that could lead

SVB did business with nearly half of all US venture capital-backed startups and 44 per cent of US venture-backed tech and health-care companies that went public last year.

At Silvergate, the issue was a run on deposits that began last year, when clients – cryptocurrency ventures, primarily – withdrew cash to weather the collapse of the FTX digital-asset exchange.

In all, US banks had booked US$620 billion in unrealised losses on their available-for-sale and held-to-maturity debts at the end of last year,.

Source: Bloomberg

https://www.businesstimes.com.sg/compan ... could-lead