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London open: FTSE gains as bank shares recover
London stocks rose in early trade on Monday, with banks pacing the advance following heavy losses at the end of last week.
At 0830 BST, the FTSE 100 was up 1.1% at 7,483.23.
Sentiment got a boost after First Citizens Bank agreed to buy the deposits and loans of collapsed Silicon Valley Bank from US regulator the Federal Deposit Insurance Corporation (FDIC).
As of 10 March, Silicon Valley Bridge Bank, National Association, had around $167bn in total assets and $119bn in total deposits.
The FDIC, which took over SVB earlier this month, said in a statement that the transaction includes the purchase of around $72bn of Silicon Valley Bridge Bank’s assets at a discount of $16.5bn.
The FDIC created Silicon Valley Bridge Bank earlier this month following the closure of SVB by the California Department of Financial Protection and Innovation.
Approximately $90bn in securities and other assets will remain in the receivership for disposition by the FDIC. In addition, the FDIC said it received equity appreciation rights in First Citizens BancShares common stock with a potential value of up to $500m.
First Citizens will open the 17 former branches of Silicon Valley Bridge Bank as First Citizens banks on Monday.
The UK arm of SVB was purchased by HSBC two weeks ago for £1.
In equity markets, Barclays, Lloyds, Standard Chartered and NatWest were among the top performers on the FTSE 100, having tumbled on Friday after a spike in Deutsche Bank credit default swaps reignited banking sector fears.
Victoria Scholar, head of investment at Interactive Investor, said: “The placatory deal for SVB has helped to calm market skittishness after the recent sthenic price action. Banks are outperforming at the European open with Deutsche Bank up by more than 6.5% and Credit Suisse up by over 2.5%.
“Commerzbank, Societe Generale and BNP Paribas are also bouncing on Monday. But there is a long way to go to recoup losses with Deutsche Bank still down over 17% year-to-date.
“A key underlying driver of the recent market maelstrom has been the sea change in monetary policy after the punchbowl of cheap money was removed. Central banks have been desperately scrambling to keep a lid on spiralling inflation rates with an abrupt ending to the era of rock bottom interest rates which had underpinned asset price growth and long helped businesses to thrive.”
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
3i Group Plc | +2.72% | +42.00 | 1,584.50 |
| 2 |  |
Ocado Group Plc | +2.21% | +9.70 | 448.90 |
| 3 |  |
Carnival Plc | +1.69% | +11.00 | 663.60 |
| 4 |  |
Persimmon Plc | +1.67% | +20.00 | 1,220.00 |
| 5 |  |
Spirax-sarco Engineering Plc | +1.64% | +185.00 | 11,485.00 |
| 6 |  |
Astrazeneca Plc | +1.53% | +170.00 | 11,250.00 |
| 7 |  |
Gsk Plc | +1.48% | +20.80 | 1,422.00 |
| 8 |  |
Barratt Developments Plc | +1.38% | +6.10 | 447.40 |
| 9 |  |
Croda International Plc | +1.37% | +88.00 | 6,504.00 |
| 10 |  |
Barclays Plc | +1.36% | +1.82 | 135.72 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Anglo American Plc | -1.87% | -47.50 | 2,490.50 |
| 2 |  |
Rio Tinto Plc | -1.69% | -89.00 | 5,164.00 |
| 3 |  |
Tui Ag | -1.30% | -18.00 | 1,362.00 |
| 4 |  |
Fresnillo Plc | -1.28% | -9.40 | 723.20 |
| 5 |  |
Antofagasta Plc | -1.12% | -17.00 | 1,500.00 |
| 6 |  |
Glencore Plc | -0.99% | -4.40 | 438.30 |
| 7 |  |
Bhp Group Limited | -0.84% | -20.00 | 2,352.00 |
| 8 |  |
Standard Chartered Plc | -0.68% | -4.00 | 587.80 |
| 9 |  |
Kingfisher Plc | -0.62% | -1.60 | 254.70 |
| 10 |  |
Phoenix Group Holdings Plc | -0.58% | -3.20 | 545.60 |
Monday newspaper round-up: HS2, Vanguard, Credit Suisse
The head of the International Monetary Fund has warned that the global economy faces risks to its financial stability because of the turbulence in the banking sector.Kristalina Georgieva, the managing director of the Washington-based lender of last resort, said rising interest rates had put pressure on debts, leading to “stresses” in leading economies, including among lenders. – Guardian
The cost of HS2’s revised and postponed London Euston terminus has almost doubled to £4.8bn since 2020, according to the the public spending watchdog, with millions wasted on botched decisions. The government announced last month that work on the high-speed line’s central London station would be paused. But the National Audit Office warned on Monday that the move would “lead to additional costs and potentially higher costs overall”. – Guardian
Fiscal drag will pull 55,000 working parents into Jeremy Hunt’s childcare tax trap over the next five years, analysis by the Centre for Economics and Business Research (CEBR) shows. The number of parents who will find it harder to go back to work or will be incentivised to keep their salaries low will swell by 71pc, in a process known as fiscal drag. – Telegraph
The world’s second-biggest fund manager has signalled its confidence in Britain with plans to open its second UK office, a move that will create 100 jobs. Vanguard, which manages $7.5 trillion (£6 trillion) globally, is to announce plans for a new office in Manchester, according to City sources. The US fund manager will lease 14,000 square feet in the Landmark development in St Peter’s Square. – Telegraph
The Dubai-owned company that admitted it had broken employment law by dismissing 800 British crew at P&O Ferries last March and replacing them with cheap foreign labour has been awarded a multimillion-pound windfall under Rishi Sunak’s freeports scheme, in what unions condemned as an “appalling” decision. – The Times
The head of the main City regulator at the time of the last financial crisis has spoken out in the controversy surrounding the recent wipeout of $17 billion of Credit Suisse bonds and criticised the supervision of the bank. Lord Turner of Ecchinswell, who was chairman of the Financial Services Authority from 2008 until it was abolished in 2013, told The Times that the Swiss authorities had done an “odd thing” by putting Credit Suisse’s shareholders before some of its bondholders in the rescue of the lender. – The Times
