Top News in Finance for March 27, 2023

KEY POINTS

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• Market optimism seeks to build further momentum.
• Deposit transfers slow down.
• Israel in turmoil due to contentious judicial reforms.
• First Citizens acquires portion of Silicon Valley Bank.

1. A More Transparent Outlook

Stocks finished the previous week on a positive note despite the turbulence caused by lingering worries about the banking sector and inconsistent statements from high-ranking officials. However, there is now increased transparency. President Joe Biden and Treasury Secretary Janet Yellen have both stated that the government is prepared to safeguard additional bank deposits in case of further upheaval. Even though the Federal Reserve raised its benchmark rate last week, it hinted at easing back as the banking crisis is expected to decelerate the economy. In addition, the FDIC announced that First Citizens Bank would acquire $72 billion of the failed Silicon Valley Bank’s assets at a significant markdown of approximately $16.5 billion. Stay updated with live market developments.

2. Decreased Movement

CNBC’s Hugh Son reports that the transfer of deposits from smaller banks to larger institutions has slowed down recently. The swift collapse of Silicon Valley Bank earlier this month sparked a widespread panic that drove depositors to withdraw their funds from seemingly risky regional banks with less diversified assets, moving them to banks like JPMorgan Chase and Bank of America, which possess more extensive business models and can better manage financial market turmoil. However, this doesn’t imply that the broader banking sector is entirely safe, as another crisis could quickly set deposits in motion once more.

3. Unrest in Israel

Israel has been engulfed in civil unrest following Prime Minister Benjamin Netanyahu’s dismissal of Defense Minister Yoav Gallant, who called for the government to halt its contentious judicial reforms. Massive protests involving hundreds of thousands of Israelis have taken place recently, marking the peak of months-long demonstrations against the reforms promoted by Netanyahu’s right-wing government, which holds a slim majority. Critics argue that Netanyahu’s judicial proposal will steer the country towards autocracy and undermine a crucial restraint on political power. Israel’s largest union has called for a general strike, leading to work stoppages at Haifa port and Tel Aviv’s Ben Gurion Airport. However, Netanyahu managed to withstand a no-confidence vote in the Knesset, Israel’s parliament.

4. First Citizens Acquires Silicon Valley Bank Segment

First Citizens Bancshares (FCNCA) will purchase a majority of Silicon Valley Bank in the wake of the lender’s downfall. First Citizens will obtain all of Silicon Valley Bank’s deposits, loans, and branches for around $72 billion at a discounted price of $16.5 billion. Meanwhile, the FDIC will retain receivership of $90 billion of SVB’s securities.