Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
European share were starting the week positively, and Wall Street was pointed to a higher open, after a deal was agreed for a US bank to take over the assets of failed Silicon Valley Bank.
The FTSE 100 index was up 66.88 points, 0.9%, at 7,472.33 midday Monday in London. The FTSE 250 was up 91.90 points, 0.5%, at 18,585.73, and the AIM All-Share was up 1.23 points, 0.2%, at 801.65.
The Cboe UK 100 was up 0.9% at 747.17, the Cboe UK 250 up 0.6% at 16,147.22, and the Cboe Small Companies up 0.3% at 13,271.44.
North Carolina-based First Citizens Bancshares said it has agreed to purchase all loans and deposits from failed California lender SVB. The collapse of SVB earlier this month triggered fears about the banking sector sector globally.
SVB, a key lender to the tech industry since the 1980s, became the biggest US bank to fail since 2008 when regulators seized it after a sudden run on deposits. Regulators created Silicon Valley Bridge Bank from SVB after the collapse, and that entity will be taken over by First Citizens from Monday.
The news is ‘helping repair sentiment towards the sector’, said AJ Bell’s Russ Mould.
Swissquote Bank Senior Analyst Ipek Ozkardeskaya: ‘Despite the bank stress on both sides of the Atlantic, the Federal Reserve, the European Central Bank, the Bank of England and the Swiss National Bank haven’t refrained from hiking interest rates over the past two weeks, weighing not necessarily on the health of the banks’ balance sheets - but on worries regarding the health of the banks’ balance sheets.
‘Today, it appears that the banking crisis is more of a confidence crisis than a fact-based panic, as was the case in 2007 when banks really had a bunch of toxic assets in their balance sheets.’
On Wednesday last week, the Fed raised US interest rates by a quarter of a percentage point resisting the urge to pause hikes in the face of banking sector turmoil. The following day, the Bank of England decided to take the bank rate to 4.25% from 4.00% previously. The week before, the ECB had gone ahead with a 50-point hike, and the SNB followed with the same.
‘The key takeaway from last week‘