UK banks’ shares bounce back after chaotic collapse of tech lender Silicon Valley Bank
SHARES in UK banks rebounded yesterday after a bruising two days caused by the chaotic collapse of tech lender Silicon Valley Bank.
A dramatic sell-off wiped almost £400billion from global financial stocks during the SVB fall out.
But British banks started recovering yesterday amid reassurances SVB’s demise was unique to the Californian bank rather than a wider issue.
Charlie Nunn, boss of Lloyds Banking Group, said yesterday: “What’s happened with SVB is relatively idiosyncratic compared to the UK”.
He stressed that Lloyds had not seen investors pull their money, or “a flight to quality” as SVB had suffered.
Shares in Lloyds, HSBC, Barclays and NatWest all rose yesterday, although not enough to recover the losses that occurred.
Traders are now betting that the Federal Reserve, the US central bank, and the Bank of England, will ease their programme of rate rises to calm the sector further.
It has emerged SVB was brought down partly thanks to poor risk management and failing to hedge — or cushion — against rising interest rate risks.
Its investment in US government bonds fell dramatically in value as interest rates rose — causing it to lose $1.8billion (£1.5billion).
The Justice Department and Securities and Exchange Commission are now investigating the collapse in the US.
But reassuringly, credit analysts at Moody’s said the “critical difference is European banks’ bond holdings are lower and their deposits more stable”.
SVB was relatively unknown in Britain but was relied upon by thousands of burgeoning tech firms.
MPs will quiz Bank of England Governor Andrew Bailey on March 28 about the failure of SVB UK.
Tory MP Harriet Baldwin has already asked if there were “wider lessons” to be learnt from the collapse.
Big cash splash
SWIMMING pools and leisure centres will be handed a £63million boost by The Treasury in today’s Budget to help with soaring energy costs.
Leisure centres in 40 per cent of councils had warned they were at risk of closure as their recovery from Covid-19 lockdowns has been thwarted by a 150 per cent increase in their heating bills.
UKActive had previously warned that 31 per cent of leisure centres could shut or reduce their services by next year without support.
Around £20million of the fund will be given in grants to help immediate cost pressures while £40million will be used to help make centres energy efficient.
Chancellor Jeremy Hunt said: “Soaring bills are hitting us all hard, and community pools have been thrown in the deep end. This vital lifeline will keep them afloat.”
Meta job cuts in ‘wake up’
FACEBOOK, Instagram and Whatsapp owner Meta is cutting 10,000 jobs as boss Mark Zuckerberg announced a “year of efficiency”.
The job cuts come just four months after Meta laid off 11,000 employees in November, part of the start of a Silicon Valley bloodbath.
The tech giant, along with its rivals, is suffering a slowdown in revenues as global economies readjust after the easing of pandemic restrictions.
During lockdowns, internet businesses boomed as people relied on online and virtual communications — but growth has now slowed.
“Last year was a humbling wake-up call,” Mr Zuckerberg said in a staff memo.
“The world economy changed, competitive pressures grew and our growth slowed considerably.”
The Facebook boss said it was possible “this new economic reality will continue for many years”.
Gas head defence
The boss of British Gas told MPs that the company had a clear audit of its subcontractor Avarto Financial Solutions just weeks before The Times revealed a scandal of forcing pre-payment meters on to vulnerable customers.
Chris O’Shea, chief executive of Centrica, told MPs he was upset that the audit “had identified no issues”.
British Gas has since suspended Avarto — while the whole energy industry has been barred from force-fitting PPMs by Ofgem, who are currently in the process of developing a new code of conduct.
Drivers pay for fuel war
ASDA’s takeover of 132 Co-Op petrol stations could lead to higher fuel prices for drivers, the competition regulator has warned.
Asda bought the mutual’s forecourts for £611million last August — a move that beefed up its grip on the fuel market and cut the Co-op’s debt pile.
But petrol and diesel prices are being closely watched during the cost-of-living crisis.
Retailers have been accused of profiteering by not passing on falling wholesale oil prices to hard-pressed motorists.
Asda had a reputation for being one of the cheapest fuel retailers — until regulators waved through its takeover by forecourt business EG Group two years ago.
The competition regulator has given Asda five days to respond to its concerns, claiming there are 13 regions with insufficient competition.
Asda could offer to dispose of some petrol stations.
NATWEST is limiting crypto payments made by its customers to £1,000 a day and £5,000 a month.
It said £329million was lost by consumers in crypto scams last year.
Research found that men over 35 were most at risk of being scammed.
Sains has 21 stores in basket
SAINSBURY’S has struck a £431million deal to buy the freeholds of 21 stores from real estate investment trust, Supermarket Income Reit.
Owning them will help the grocery chain cut rentals.
Sainsbury’s has more than 600 supermarkets and 800 convenience stores.
Last September its bid to sell 18 stores to another property investor was scrapped because of market volatility.
Grocery chains are trying to find ways to use their property assets to bolster balance sheets as profit margins come under pressure from rising costs.
Morrisons, now owned by private equity hands, is planning to sell and lease back stores and potentially some of its manufacturing sites to raise money.