Global bank bailout – Here we go again?
SVB, Signature, Credit Suisse, First Republic … it all sounds familiar. Shard Capital’s Bill Blain tells IG’s Angeline Ong why this could be the start of another global bank bailout and where investors can head to find cover.
Cut out the noise
Ong: Bill, thank you so much for joining us. There's been so much going on out there. First SVB, then the central banks and the markets and now more news of rescues coming out of the US. What's the real story here?
Blain: Listen, we're back in one of these extraordinary market situations, which basically boils down to almost like a war between the forces of chaos, which is people panicking about how markets are going to develop and the forces of stability, which are the central banks trying to engineer that stability by persuading the market that the banking system is stable.
Skirmishes
Blain: So as this banking crisis really comes to fruition, we've seen a number of skirmishes. The collapse of Silicon Valley Bank, I would say, is just a skirmish. It was quickly addressed by banks backstopping every depositor and providing liquidity. And then, of course, we had the extraordinary thing of Jamie Dimon, the head of JP Morgan, leading $30 billion of Wall Street's finest and try and rescue another ailing bank, First Republic Bank. At the same time, we've got this incredible story going on around Credit Suisse Group AG (CH), where the Swiss National Bank, and I'm sure together with the European Central Bank, managed to put together a very quick backstop plan to provide them with as much liquidity as needed. And at the same time, Christine Lagarde, the head of the European Central Bank, went out there and I would say courageously decided to go ahead with a 50 basis point hike by the ECB at a time of market tension to demonstrate just how safe and secure the system was.
Bond markets next?
Blain: At the end of the day, it's all a bit of a game. It's central banks trying to persuade us there's nothing to worry about. Then, it's the doubts of the market about just how badly damaged the rise in interest rates has hit the bond markets, therefore leaving massive holes in the real numbers that underlie banks. I'll be very happy to talk about just how much damage has been done to the bond market.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
