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MARCH 24, 2023

UBS BATTLES TO KEEP CREDIT SUISSE’S KEY PEOPLE AND CUSTOMERS

Credit Suisse and UBS are taking measures to retain their wealth management staff in Asia-Pacific. UBS’s head of wealth management Iqbal Khan, who co-heads Credit Suisse’s wealth management business and Francesco De Ferrari, is believed to be using his knowledge and people skills to reassure employees and clients that it is safe to stay with the struggling bank. He recently took part in a private event held in Hong Kong, in which it was discussed the ways to keep hold of their talent, including compensation. In related news, it is worth noting that both UBS and Credit Suisse are reportedly being investigated by the US Justice Department over allegations of aiding Russian oligarchs in evading sanctions.

YELLEN: REGULATORS READY TO PROTECT US BANKING SYSTEM

US Treasury Secretary Janet Yellen addressed concerns over her remarks on implementing nationwide deposit insurance that resulted in market fluctuations. In a hearing before a subcommittee of the House Appropriations Committee, Yellen reassured lawmakers that regulators are prepared to take steps to protect the banking system if necessary.

STOCKS TUMBLE

Stock prices fell for the second day in a row,  particularly in the banking sector, amid investor concerns about the financial industry’s stability. U.S. regional bank stocks were hit particularly hard, with the KBW Regional Bank index sliding 3%, as investors remained worried about the impact of rising interest rates and a possible economic slowdown.

Additionally, The Stoxx Europe 600 Index dropped, with bank shares wiping out the gains they had made recently, and Deutsche Bank shares fell the most in nine months by 12%. The US equity futures saw a decline too. In response, many investors turned to safer assets, with Treasury yields falling and German and UK government bonds rallying. The dollar also strengthened as investors sought out more stable currencies during this period of market volatility.

FED’S LENDING PROGRAM

US banks have been facing financial problems due to losses from owning bonds. To help ease this burden, the Federal Reserve created the Bank Term Funding Program, which allows banks to borrow money more cheaply using certain assets as collateral. As a result, banks can borrow money even if the value of these assets has dropped in the market. This program has been so successful that almost five times the initial amount has been borrowed through it. And even though the Fed lowered the amount of money from $152.9 billion to $110.2 billion, banks are still borrowing heavily through this program to help manage their financial struggles.

The Fed also revealed that they have started lending money to foreign central banks for amounts as worth as $60 billion, which suggests that there’s a growing need for dollars and cash outside of the US.

TIKTOK’S SECURITY UNDER SCRUTINY IN US CONGRESS

Let’s remember that TikTok CEO, Shou Chew, appeared before the US Congress to address concerns that the social media app might be connected to the Chinese government and the potential national security risks associated with it. In his testimony, Chew stressed that his company’s app is not an arm of the Chinese government and is, in fact, independent from it. He tried to ease the lawmakers’ concerns by emphasizing the app’s ties to the US, but still, Congress members were doubtful of his assurances and openly expressed their distrust, with some even calling for the app to be banned in the US.

The ongoing controversy over TikTok is considered to have had an impact on the stock market, with media stocks rallying higher. While US social media rivals are likely to benefit from TikTok restrictions, it was actually Netflix that was the biggest gainer on Tuesday.

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