Bank shares in Europe and Asia slid on Monday, as the collapse of startup-focused Silicon Valley Bank continued to shake markets, although U.S. banking stocks rallied in premarket trading after authorities moved to stem the contagion.
The U.S. government stepped in on Sunday with a series of emergency measures to shore up confidence in the banking system following the failure of Silicon Valley Bank (SVB) , which marked the biggest U.S. bank failure since the 2008 financial crisis. That helped U.S. banks' shares to gain in premarket trading. Bank of America was up 3% and JPMorgan up 1.9%, but European and Asian banks were still under pressure.
Europe's STOXX bank index was down 2%, having shed 3.78% on Friday. Earlier in the day, Japan's Topix bank index lost 4%, while Singapore's largest banks also lost ground, down around 1%. HSBC's London listed shares were down 1.45% after it said it would acquire the UK subsidiary of stricken Silicon Valley Bank for 1 pound( $1.21).
After a dramatic weekend, U.S. regulators said the bank's
customers will have access to all their deposits starting on
Monday and set up a new facility to give banks access to
emergency funds.
The Federal Reserve also made it easier for banks to borrow
from it in emergencies.
U.S. banks lost over $100 billion in stock market value late
last week following the collapse, while European banks lost
around another $50 billion in value, according to a Reuters
calculation.
"The Fed are not only addressing concerns over the bank's
asset side of the balance sheet but on the liability side, where
they are essentially stepping in front of a larger bank run,
which...can be devastatingly swift to bring down any
institution," said Chris Weston, head of research at
Pepperstone.
"There's likely going to be further migrations to the
stronger banks and those with a large asset base and low equity
will continue to see depositors divest capital."
SVB's collapse comes alongside the closure of crypto-focused
bank Silvergate , which last week disclosed plans to wind
down operations and voluntarily liquidate, in the aftermath of
FTX's implosion last year.
U.S. state regulators on Sunday also closed New York-based
Signature Bank , which became the next casualty of the
banking turmoil after SVB.
(Reporting by Rae Wee in Singapore and Alun John and Amanda
Cooper in London, Editing by Sam Holmes and Ed Osmond)
