S&P futures rise slightly Monday following backstop of SVB depositors: Live updates

Investors woke up to the news that HSBC would acquire Silicon Valley Bank’s UK arm to avoid disruption to the UK technology sector, ensuring the continuity of banking services and supporting confidence in the financial system. The announcement offered some respite for depositors and shareholders, including those in Asia. However, the news wasn’t enough to sweep away concerns regarding the overall health of the banking sector.

Bank stocks falter

As worries grow over the health of the US banking system, bank stocks were under pressure for early premarket trading on Monday. Regional banks were hit hardest, with SPDR S&P Regional Banking ETF (KRE) dropping 2.4%. First Republic, PacWest Bancorp, and Western Alliance were among the biggest losers, with losses between 17% and 50%. Meanwhile, Wells Fargo shares fell 2.1%, Citigroup lost 1.9%, and JPMorgan Chase dipped 1%.

Asian SVB depositors state limited exposure.

Several Asia-based clients of Silicon Valley Bank filed clarifications on their exposure to the troubled bank on Monday. Shanghai Pudong Development Bank saw its shares fall as the joint venture between the Chinese bank and SVB made it clear its balance sheet is independent. BeiGene stated that uninsured cash deposits at SVB amounted to only about 3.9% of its total as of December 31. Mobvista asserted it has minimal exposure to SVB. Finally, Brii Biosciences stated that less than 9% of total cash and bank balances were at SVB.

Related Facts:

● Silicon Valley Bank’s disclosure regarding the need to raise $2.25 billion and the $1.8 billion loss from selling all its bonds surprised investors and led to the bank’s closure by regulators.
● The bank’s collapse caused turmoil in the banking sector and marketed more widely, with customers withdrawing up to $42 billion of deposits by Thursday.

Key Takeaway:

HSBC’s acquisition of Silicon Valley Bank’s UK arm may have calmed some investors’ concerns regarding the fate of SVB’s depositors and shareholders. However, the overall health of the banking sector in the US and beyond remains in the spotlight.

Conclusion:

While investors took some comfort from acquiring Silicon Valley Bank’s UK arm by HSBC to avoid disruption to the UK technology sector, there is still much unease surrounding the banking sector. The events surrounding SVB’s closure highlight how quickly things can change in finance. Deposit insurance is critical, and depositors should always investigate the bank’s health where they keep their funds.