Mar 13, 2023
The Daily Chase: Regulators take control of SVB Canadian division; Markets point to volatile open
First Look With Surveillance: Goldman Sees, HSBC Buys
Canada's banking regulator is stepping into the Silicon Valley Bank crisis after the bank's swift collapse last week. Yesterday, the Office of the Superintendent of Financial Institutions announced that it has taken control of the company's domestic operations, and said it would seek a legal order to wind up the division. SVB doesn't take commercial retail deposits here in Canada, and its domestic ops are a pretty minuscule part of the bank - $864 million worth of assets as of the end of last year. The situation is also on Ottawa's radar – Finance Minister Chrystia Freeland tweeted Sunday that she spoke with financial sector leaders and the Bank of Canada about the matter, and the feds remain in close contact with OSFI.
SVB FALLOUT FEARS GROW
It's looking like the concerns aren't just restricted to SVB – over the weekend, state regulators shut down New York's Signature Bank after the firm faced a torrent of deposit outflows on Friday. Elsewhere, shares of San Francisco's First Republic are getting pummelled, down as much as 70 per cent in the premarket, after the lender said it has received additional liquidity from the U.S. Fed and JPMorgan. All of this comes even after regulators came out with some extraordinary measures to fully protect depositors and announced a new funding program that will offer one-year loans to banks under easier terms to try to stem the crisis of confidence.
MARKETS FLUCTUATE IN SPITE OF TURMOIL
It looks like investors are struggling to figure out exactly how to navigate the first bank collapse of note since 2008. U.S equity market futures have been all over the map this morning, fluctuating between positive and negative territory. Europe's a little more definitive with most major indices down between two and four per cent – though it's worth noting Europe's financial system has been much more fragile in recent years than that of the U.S. (think the struggles of Deutsche Bank, Credit Suisse, or even Italy's Monte dei Paschi.) Here at home, worth noting RBC and TD took the most points off the table on Friday, so we'll be keeping a close eye on Canadian financials in today's trade.
OTHER NOTABLE STORIES
- One last one on SVB – HSBC is buying the company's U.K. operations for £1.
- The members of the special committee formed to evaluate management's proposed buyout of Canaccord Genuity have resigned from the board, saying they couldn't fulfill their mandate after significant shareholder Skky called for a meeting to remove them.
- Discount air carrier Flair Airlines said over the weekend four of its planes were seized over a leasing dispute, affecting some flights.
- Ritchie Bros. co-founder David E. Ritchie is coming out against the firm's proposed US$7.3-billion takeover of IAA, saying it threatens the auctioneer's corporate culture.
- Notable data: National Balance Sheet Accounts
- Notable earnings: Ivanhoe Mines, McEwen Mining