'Contagious bank runs' to blame for current turmoil, says US Treasury Secretary
The turmoil affecting the world's financial system was caused by "contagious bank runs", the US Treasury Secretary has said.
Janet Yellen insisted the recent banking turmoil which has seen the collapse of Silicon Valley Bank and the rescue of Credit Suisse is "different from 2008".
She insisted the US banking system is "sound even as it has come under some pressure" but added the US Federal Reserve stands ready to intervene in the event of a smaller bank collapse.
Speaking after giving a speech to the American Bankers Association this afternoon, she said the situation was different from 2008, which "was a solvency crisis," while "what we are seeing is contagious bank runs".
She said the US Federal Reserve intends to "remain vigilant in the days and weeks to come,” adding it had taken every step to "reassure the public that our banking system is resilient".
Referring to the collapses of Silicon Valley Bank and Signature Bank, she said: "Our intervention was necessary to protect the broader US banking system, and similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion."
Her comments come as global bank stocks have surged after concerns about the takeover of Credit Suisse cooled.
The blue-chip FTSE 100 index has climbed 2pc today, driven by the rise in banking stocks, which have surged by 4.3pc across the FTSE 350.
NatWest has jumped as much as 7.1pc, Barclays has risen as much as 5.9pc and Lloyds has jumped as much as 4.9pc.
That's all from me. But before I go, let's have a quick look at US government markets ahead of tomorrow's Federal Reserve announcement.
The policy sensitive two-year yield has surged above 4pc, while the benchmark 10-year yield has jumped around 10 basis points to 3.6pc.
Meanwhile, the Dow Jones Industrial average is up 0.98pc at 32,561.82, while the broad-based S&P 500 has climbed 1.31pc. The tech-rich Nasdaq Composite so far has gained 1.58pc 11,860.11
We'll be back with more first thing tomorrow morning.
Another day, another huge move in the US 2-year Treasury yield. Up 25 bps today, its biggest one-day rise since June 5, 2009. pic.twitter.com/ZYJ7Hsokh7
— Jamie McGeever (@ReutersJamie) March 21, 2023
TikTok faces "pivotal moment" ahead of CEO's testimony before US officials
TikTok boss Shou Zi Chew said the Chinese app faces a "pivotal moment" amid calls to restrict access across the US amid security concerns.
"Some politicians have started talking about banning TikTok. Now this could take TikTok away from all 150 million of you," he said in a video shared today on TikTok's official page.
Mr Chew said he will share what TikTok is doing to "protect Americans using the app" during his testify before Congress later this week.
The video, which features the US Capitol building in the background, also notes that TikTok employs 7,000 workers in the US.
Our CEO, Shou Chew, shares a special message on behalf of the entire TikTok team to thank our community of 150 million Americans ahead of his congressional hearing later this week.
♬ original sound - TikTok
Government ends three-year ban on state capture consulting firm
The UK government has unexpectedly lifted its ban on consulting firm Bain nearly eight months after it was introduced.
The Boston-based company was handed a three-year ban on bidding for state contracts last August over its role in a scandal in South Africa where it was accused of subverting democratic institutions.
Last year, Bain & Co was found to have helped undermine South Africa’s revenue service, restricting its ability to investigate tax evasion.
The UK government has now removed the restrictions from Bain, except from its South Africa arm, saying it was satisfied that appropriate actions had been taken by the company to address the issues.
Jeremy Quin, paymaster general in the Cabinet Office, said:
Bain & Co has welcomed this robust external challenge, to help ensure that going forward their corporate governance is of a consistently high standard, that the self-cleansing actions put in place are operational and that any new issues arising are being managed and communicated transparently.
FTSE 100 companies now make more money in the US then the UK
Britain’s biggest listed companies now make more money in America than at home, according to a review of market data.
Sales by FTSE 100 companies in the US have overtaken those in the UK, analysis by the Telegraph shows.
A quarter of revenues made by firms on London’s blue-chip index during 2022 – totalling an estimated £450bn – came from the US, compared with just 22pc of revenues made in the UK.
Chief business correspondent Oliver Gill explains...
First Republic shares rebound by nearly 50pc
The share price of First Republic Bank has rebounded as JP Morgan advises the troubled US lender on its strategic alternatives.
First Republic has nearly reversed Monday's losses as its share price jumps over 46pc to $17.82. It comes after its share price nearly halved yesterday fears it will need a second rescue despite receiving $30bn of fresh deposits from a group of Wall Street banks.
The new plan could see First Republic convert some or all of the $30bn deposits into a capital infusion to stabilise the business, Bloomberg reported.
FTSE 100 ends best day in four months
The UK's main equity indexes finished in the green after shares in banks across the FTSE 350 increased by 3.34pc.
The FTSE 100 index closed 1.79pc higher at 7,536.22, marking its best performance in over four months.
The blue-chip index teetered on a 2pc rise, climbing as high as 1.9pc.
Shares in UK-listed lenders rose as fears of a bigger banking crisis eased. Risers included Barclays (share price up 4.93pc), Lloyds (up 2.78pc) and NatWest (up 5.66pc)
A weak pound, down 0.7pc, also boosted the exporter-heavy FTSE 100.
The domestically-focused FTSE 250 index ascended 1.54pc to close at 18,779.10.
Crisis at Britain’s most lucrative investment trust as chairman quits
The chairman of a leading City tech investor has stepped down following a public bust-up over corporate governance rules.
Banking corrrespondent Simon Foy has more:
Fiona McBain, who has been chairman of Scottish Mortgage since 2017, will stand down after the London-listed investment trust’s annual meeting in June, it said on Tuesday.
It comes after a board meeting quickly descended into acrimony last week following a row between non-executive director Amar Bhidé and Ms McBain, according to a person close to the FTSE 100 company.
Mr Bhidé, a business professor at Tufts University in Massachusetts, clashed with Ms McBain after taking issue with the appointment process of two new board members. The row escalated to such an extent that Mr Bhidé was asked to hand in his resignation. He refused but said he received the board’s agreement that it would remove him before walking out.
Scottish Mortgage said on Friday that he had not been removed.
Such was his discontent, Mr Bhidé then approached the Financial Times and put his concerns about Scottish Mortgage on the record, which included condemning Ms McBain for a lack of independence.
On Monday, the trust’s board determined that Mr Bhidé had breached a confidentiality clause as a director, a source said. Board members tried approaching him again to resign, but could not reach him. Ultimately, the company secretary signed the letter of resignation on Mr Bhidé’s behalf on Monday night.
However, the US academic was not the only casualty of the ugly boardroom bust-up at one of Britain’s oldest investment trusts.
On Tuesday, the trust also announced that McBain would step down at its annual meeting in June, adding that changes were the result of “succession planning” developed over the past year.
Here's why Scottish Mortgage has come under pressure following a slump in tech stocks...
Legal action over Credit Suisse's AT1 bonds is likely, says banking disputes lawyer
It's difficult to see how the controversy around Credit Suisse's AT1 bonds won't result in legal action, according to one City lawyer.
Jonathan Cary, a banking and finance disputes at RPC, said:
Bondholders are crying foul and it is difficult to see this playing out anywhere other than in the Courts where the precise terms of the bond documentation and the actions of the Swiss regulators will be under the microscope. However, more broadly, this development has introduced further uncertainty into the market just when stability was required.
The ECB and the Bank of England have been quick to seek to reassure bondholders that they will uphold the conventional order in which holders of equity and debt bear losses in a resolution or insolvency scenario.
However, we will have to see whether the AT1 bond market can survive and the impact it will have on the banks' ability to raise capital.
This case highlights the need for transparency and clear communication from issuers and regulators to ensure that investors are able to make informed decisions, especially in times of crisis.
Here's how the Credit Suisse rescue wiped out $17bn of AT1 bonds – and threatened the next crisis
Currys lifts pay ahead of new minimum wage law
Electronics retailer Currys is increasing staff salaries for the fourth time in a year and a half.
From next month, the Leicester-founded company will increase hourly pay from £10.35 to £10.50 for around 10,000 store workers across the UK.
London-based employees will receive £11.50 an hour, up from £11.43.
This minimum rate will increase again for high-performing individuals who have passed a six-month skills development programme.
The salary bump when combined with a bonus scheme - under which average workers receive an additional 89p per hour - makes Currys one of the highest-paying retailers in the UK, the company said.
Paula Coughlan, chief people, communications and sustainability officer at Currys, said:
We know that investing in our colleagues is the most important thing we can do, especially with the continued cost-of-living crisis.
This latest increase means that we are one of the highest-paying retailers in the UK.
It comes ahead of new minimum wage laws which come into effect next month that require workers aged 23 and over to be paid at least £10.42 per hour.
Thanks for following everything today. I'm signing off now and Adam Mawardi will take things from here.
Hunt avoids question on lowering taxes despite better borrowing figures
The Chancellor has said he is "not in a position to make any assessment" about whether he can cut taxes, despite borrowing figures indicating he may have money to spend.
Mr Hunt said bringing down taxes is "of course it is a priority for any Conservative chancellor" but he said "there are things even more important".
He told the House of Lords economic affairs committee that one important factor is stability and the other is "the competitiveness of the UK economy, from which comes the growth which means we can afford to bring down tax".
Despite public borrowing coming in higher than expected in February at £16.7bn - a record for the month - the level of borrowing points to more rather than less headroom for the Chancellor according to Ruth Gregory of Capital Economics.
With only one month left of the fiscal year, cumulative borrowing is at £132.2bn, far below the full-year deficit of £152.4bn predicted by the Office for Budget Responsibility last week.
Hunt says sale that wiped out Credit Suisse bondholders was 'optimal outcome'
Jeremy Hunt has said the wiping out of bondholders under the UBS rescue of Credit Suisse was the "optimal outcome".
The Chancellor was answering a question on the House of Lords economic affairs committee about the relaxation of rules that paved the way for the sales of the Swiss bank and the UK arm of Silicon Valley Bank - and whether this created uncertainty.
Mr Hunt said the relaxing of rules meant "alternative outcomes that would have created a much bigger shock… were not necessary".
He added the changes of rules that allowed the deals in Europe to go ahead "were in the broader schemes adjustments that were made in order to make a sale possible".
Holders of $17bn of so-called additional tier 1 bonds in Credit Suisse were wiped out before shareholders under its takeover by UBS in a highly unusual move. Shareholders usually lose their money before bondholders.
Princess of Wales urges businesses to support family life
Royalty has come to the City.
The Princess of Wales urged business leaders to prioritise wellbeing in the workplace to support family life as she launched her Business Taskforce for Early Childhood.
The future Queen is hoping global firms who have joined her taskforce will be the catalyst for change and encourage firms across the country to train and help staff to maintain their social and emotional welfare, aiding their work and home life.
Congress must raise debt limit to avoid 'catastrophic wound' to US, says Yellen
Janet Yellen, the US Treasury Secretary, has called on Congress to increase the amount the US can borrow to prevent "a truly catastrophic wound on our financial system".
Republicans in the House of Representatives are holding up a bill to raise the US debt ceiling, which hit its $31.4trn borrowing limit in January.
Ms Yellen told the American Bankers Association this afternoon that she worries Congress "waiting until the last minute to do it," reflecting on the late agreement in 2011, by which time the US Government’s credit rating was downgraded, raising the cost of borrowing.
She said: "If there were a failure to raise the debt limit, I think it would be utterly catastrophic."
She argued doing so was a "basic responsibility Congress has to the American people".
It comes after US regulators said that all depositors at both collapsed Silicon Valley Bank and Signature Bank, including those holding uninsured funds, those exceeding $250,000, would be protected by federal deposit insurance.
'Contagious bank runs' to blame for present turmoil, says Yellen
Janet Yellen has insisted the recent banking turmoil is "different from 2008" as she said the US Federal Reserve stands ready to intervene in the event of a smaller bank collapse.
The US Treasury Secretary was speaking during a Q&A after giving a speech to the American Bankers Association this afternoon.
She insisted the US banking system is "sound even as it has come under some pressure".
She said the situation was different from 2008, which “was a solvency crisis," while "what we are seeing is contagious bank runs".
She said the US Federal Reserve intends to "remain vigilant in the days and weeks to come,” adding it had taken every step to “reassure the public our banking system is resilient".
UK could save £17bn with flexible electricity system, MPs told
Britain could be saving around £17bn every year if it builds a flexible electricity system, MPs have been told.
Rachel Fletcher from energy supplier Octopus suggested managing when people use electricity and figuring out how to store electricity in the short and long term.
She told MPs on the business, energy and industrial strategy committee:
What we should be doing as an industry is getting our head around the how.
How do we keep renewable investors confident while getting the price signals which will keep the overall cost of the energy system down?
Lots of studies have suggested we could be saving £16-17bn a year if we actually properly harness the flexibility that we will have in our homes, in our vehicles, in small-scale storage as well as grid-scale storage and interconnectors across the country.
Experts say that by changing when electricity is used can help significantly reduce the number of wind turbines and solar panels that need to be built.
For instance, if electric cars are plugged into the grid and that can send electricity to households across the countries when demand is high, that could provide the equivalent of three nuclear power plants worth of electricity.
Banks push FTSE 100 higher
The strong day continues on the stock markets in London as well.
The blue-chip FTSE 100 index has climbed 1.9pc today, driven by the rise in banking stocks, which have surged by 3.6pc across the FTSE 350.
NatWest has jumped as much as 6.3pc, Barclays has risen as much as 5.6pc and Lloyds has jumped as much as 4.5pc.
It is the same story on the FTSE 250, where midcap companies have climbed 1.5pc.
The rescue of Credit Suisse has calmed nerves about a bigger banking crisis.
Investors are now awaiting the outcome of the Federal Reserve's monetary policy meeting, with the next move for US interest rates revealed on Wednesday evening.
The Bank of England reveals its next interest rate decision on Thursday, with central banks under pressure to slow the pace of increases, which would ease the falling prices of bonds that caused the banking turmoil.
Wall Street leaps at the opening bell
US markets have begun the day strongly as confidence returns to the markets after the Credit Suisse turmoil.
The Dow Jones Industrial Average has jumped 1pc at the opening bell to 32,568.19 while the broad-based S&P 500 leapt 1.1pc to 3,994.15.
The tech-heavy Nasdaq Composite surged by 1.3pc to 11,785.36.
Credit Suisse shareholder weighs up legal action over sale
One of Credit Suisse's biggest shareholder groups has said it is weighing up legal action over its £2.7bn sale to UBS.
Ethos Foundation said the rushed rescue is an unprecedented breach of shareholder rights that may scare off institutional investors.
The group acts as a proxy adviser for pension funds and other members holding between 3pc and 5pc of the bank’s stock and $400 billion in assets.
Ethos' chief executive officer Vincent Kaufmann said: "This situation is a big failure of corporate governance and may send a poor image of Switzerland for international institutional investors in terms of good governance."
Ethos said it’s asking the Swiss authorities and UBS to explore a possible separation and listing of Credit Suisse’s Swiss unit following the merger, citing concerns about market competition and job cuts.
Just Eat to lay off 1,700 delivery staff as takeaway boom ends
Just Eat Takeaway is to lay off as many as 1,700 delivery drivers as the company grapples with a post-pandemic slowdown.
Senior technology reporter Matthew Field has the details:
Bosses are understood to have informed impacted workers this morning, with delivery drivers being offered six weeks' notice with pay.
The shake-up will also affect 170 full time Just Eat staff within its operations team.
The £3.5bn food delivery company, which is listed in London and Amsterdam, has been seeking to slash spending as takeaway order numbers plunge post-pandemic and families grapple with the cost-of-living crisis.
Read why Just Eat shares have fallen this year.
US markets expected to rise at opening bell
Wall Street's main indexes are poised to open higher after the rescue of Credit Suisse calmed nerves about a bigger banking crisis.
The state-backed takeover of Credit Suisse by UBS as well as steps taken by central banks to boost liquidity have eased fears of a contagion to the broader banking sector.
Although analysts still believe the crisis has not been fully averted, investors are awaiting the outcome of the Federal Reserve's monetary policy meet.
Traders now largely expect a 25-basis-point rate hike after the Fed's two-day meeting concludes on Wednesday, half the 50 point increase expected before the banking crisis triggered by the collapse of Silicon Valley Bank and Signature Bank earlier this month.
Peter Cardillo, chief market economist at Spartan Capital Securities, said:
While it's a plus that banks so far have been rescued in the sense of deposits, I don't think we've seen the end of the turmoil.
"The last thing the Fed wants to do is to create havoc in the markets... and the best thing that they could do is just take a pause and then revisit it in May.
In pre-market trading, the Dow Jones Industrial Average has risen 0.9pc, while the S&P 500 has gained 0.8pc. Futures on the Nasdaq 100 have climbed 0.6pc.
Tesco cuts Clubcard rewards
Tesco has announced it is to cut the value of its Clubcard rewards scheme in a move that has provoked anger from customers.
The UK's biggest supermarket said its Clubcard points will be worth twice their value when customers cash them in, rather than three times as they are now, from June 14.
The scheme enables shoppers to collect points for money spent at Tesco and exchange them for vouchers which can be used in store or for excursions such as restaurant meals and day trips.
In an email to current Clubcard members, Tesco's chief customer officer Alessandra Bellini said the move would "make sure we can continue to provide you with a wide range of exciting rewards, whilst keeping our product prices low".
A Tesco spokesman said:
Clubcard unlocks the best value from Tesco - from thousands of exclusive deals through Clubcard Prices, to money off your groceries and fuel, or accessing double the value of your vouchers with more than 100 Clubcard Reward Partners?.
We are making a change to how members can use their vouchers with our Reward Partners, but they will still be able to unlock great value in the same range of ways as before.
Credit Suisse staff flood headhunters with calls to avoid job losses
Recruiters across the world are getting an unprecedented flood of calls from Credit Suisse bankers seeking new jobs as the embattled Swiss lender is taken over by UBS.
From Singapore to London to New York, headhunters and rival lenders have reportedly been fielding calls over the past few days from anxious Credit Suisse staff.
A headhunter in London — where Credit Suisse employs about 5,500 people, according to its website — said he has been fielding calls all weekend, particularly from those in the equities division where the overlap with existing business at UBS is extensive, according to Bloomberg.
One firm in Singapore reportedly handled questions from some 30 mostly Credit Suisse private bankers about available jobs on Monday, while another recruiter in Hong Kong has been talking to more than 20 senior investment bankers since last week.
UBS’s rescue of Credit Suisse is expected to result in tens of thousands of job losses, according to the Financial Times, as overlapping roles are removed.
FTSE jumps as central banks reassure investors
The FTSE 100 has jumped as banking stocks surge amid the restoration of calm following the Credit Suisse turmoil.
London's blue-chip index has climbed 1.4pc in early trading with banking stocks rising 2.5pc across the FTSE 350.
NatWest has jumped as much as 5pc, Barclays has risen as much as 4.8pc and Lloyds has jumped as much as 4.1pc.
Reassurances from the Bank of England and ECB that shareholders will take losses ahead of so-called AT1 bondholders in any future collapse have calmed investors.
They had begun reassessing their portfolios after Swiss regulators wrote down $17bn of AT1 bonds under UBS's takeover of Credit Suisse but left shareholders with some value in a highly unusual move.
Traders are also speculating that the US Federal Reserve might go ahead with a smaller 0.25 percentage points interest rate rise tomorrow, down from the 0.5 points previously expected, which has boosted markets.
UK faces shortage of reliable power
Britain is facing a shortage of reliable power generation as nuclear, coal and gas plants close in the years ahead without being replaced, analysts have warned.
The consultant Baringa Partners said so-called dispatchable capacity, which can generally be called on at will, is set to fall from 93pc to 85pc of peak demand levels by 2027.
It said this was largely due to the retirement of inefficient fossil-fuel plants and nuclear reactors, as well as a rise in demand because of electrification.
Drax, which generates dispatchable power from its biomass and coal-power station in Yorkshire, has urged the government to back its investment in carbon capture by approving it for a subsidy program, needed for the project to go ahead.
Earlier this month, EDF announced plans to extend the lives of two of the UK's five remaining nuclear power stations.
Heysham 1 and Hartlepool had been due to close in March next year, but they will now be kept open until early 2026.
Childcare market may not be able to grow enough to meet demand, MPs warned
Plans from the Chancellor to provide up to 30 hours a week of "free childcare" for working parents in England with children as young as nine months will face "significant challenges" to meet demand, experts have told MPs.
Tony Wilson, director at the Institute for Employment Studies, told the Treasury Select Committee:
The OBR are forecasting 60-odd-thousand more workers and expecting more hours as a result, as people already in work take on more hours.
Reducing costs for those already in work will of course also be welcome.
In practice though, there are some quite significant challenges about whether the market can grow quickly enough to meet that demand and whether it will look to offset some of the costs of providing this offer by raising fees outside of core hours.
We've been looking at some of the online vacancy data on this as well to give us some insights on this - it does appear to be the case that there are significant struggles at the moment with filling childcare vacancies.
Advertised salaries for childcare workers have risen by around 25pc to 30pc between 2019 and now.
Pound falls as traders expect Bank of England rate slowdown
The pound has fallen as traders speculate that the stress on banks will stop the Bank of England from increasing interest rates much more, if at all, on Thursday.
Investors remain concerned over the fate of the banking sector after US lender First Republic shares tumbled nearly 50pc on Monday amid fears it will need a second rescue.
Investec has downgraded its expectations for Thursday's decision from 4.25pc to 4pc, citing increased concerns over financial stability.
The pound has fallen 0.2pc against the dollar but remains above $1.22.
Meanwhile, markets are pricing in a 25pc chance that the Fed will leave rates unchanged when it announces its monetary policy decision on Wednesday, with a 75pc chance of a 25 basis point rate hike, according to the CME FedWatch tool.
North Sea oil workers call off strikes
Offshore workers on North Sea oil rigs have called off strike action after securing an extra three weeks paid leave when they work on BP assets.
The strike involved almost 50 workers at BP's Andrew, Clair, Clair Ridge, ETAP, Glen Lyon and Mungo installations in the North Sea.
The workers, who are employed by Sparrows Offshore Service, have been offered a deal being equivalent to a 10pc rise in pay, the union Unite said.
Great British Railways headquarters revealed
Derby has been announced as the location to host the headquarters of new public sector body Great British Railways (GBR).
Transport Secretary Mark Harper confirmed the decision following reports that the East Midlands city had been successful in its bid.
The unsuccessful shortlisted locations were Birmingham, Crewe, Doncaster, Newcastle and York. Mr Harper said:
Among an exceptional list of shortlisted applicants, Derby scored highest in the expression of interest stage of the competition, which analysed its suitability against six published criteria: levelling up, connectivity, opportunities for GBR, value for money, heritage and public support.
It also scored highest in the six-week public vote, attracting 45,600 votes, more than 5,000 ahead of the second placed location in a total vote of 205,000.
Derby will become the heart of Great Britain's rail industry, bringing together track and train, as well as revenue and cost.
This means we will finally treat the railway as the whole system it should be rather than a web of disparate interests that it's become.
UK national debt 'pretty grim,' says Resolution Foundation boss
The outlook for UK national debt has improved but is still "pretty grim" compared with projections from a year ago, economists have warned MPs following last week's budget.
Torsten Bell, chief executive of the Resolution Foundation, told the Treasury select committee this morning:
The OBR's improvement in borrowing could be between £150bn and £160bn to 2027/28.
It's important not to forget the big picture which is that the level of debt is still 15% of GDP higher than it was expected to be back in March 2022.
So, some good news, but the good news means things are better but still pretty grim compared to where we were before the energy shock turned up.
Oil prices bounce back
Oil prices have bounced back amid a return to confidence in markets.
Brent crude, the international benchmark, has risen 1pc on its way back towards $75 a barrel as banking stocks rebounded, easing concerns about a global recession.
Prices had fallen to their lowest level since December 2021 on Monday amid the turmoil created by the £2.7bn rescue of Credit Suisse.
Meanwhile, Opec Secretary-General Haitham Al Ghais, who is visiting Baghdad, said the organisation's most important target is to achieve stability and balance between supply and demand.
Iraq's oil ministry also quoted him as saying that the latest Opec deal has contributed in addressing challenges and difficulties that global markets face.
Pimco faces heavy losses from Credit Suisse bond writedown
Pacific Investment Management and Invesco are among the largest holders of Credit Suisse's so-called additional tier 1 or AT1 bonds that have been wiped out after the bank's takeover by UBS.
California-based asset manager Pimco is the largest holder of the Swiss lender's AT1 bonds with around $807m of the securities — the riskiest in the bank's debt stack — Bloomberg reported.
The Credit Suisse notes are set to fall to zero and were quoted at prices of a few cents on the dollar on Monday.
Because of the extraordinary government support, the takeover is set to trigger a complete write-down of 16 billion francs (£14bn) of the bank's AT1 bonds in order to increase core capital.
Pimco also holds almost $3bn of Credit Suisse senior bank bonds, some of which have risen by around 25 cents on the euro on Monday compared to Friday’s levels, sources said.
Elsewhere, Invesco holds around $370m of Credit Suisse's AT1 debt.
BlackRock's AT1 exposure at the end of February was around $113m. BlackRock has reportedly reduced some of its holdings in recent weeks.
UBS takes hit on outlook after Credit Suisse takeover
UBS has had its credit outlook lowered by S&P Global Ratings and Moody's Investors Service as the bank faces integration and restructuring challenges following its emergency takeover of Credit Suisse.
The Swiss lender's rating outlook was cut to negative from stable by both firms, with analysts citing the risk of client attrition and the complex task of running down Credit Suisse's trading operations.
UBS's long-term rating was affirmed by S&P at A- and its senior unsecured rating was affirmed at A3 by Moody's.
S&P analysts including Benjamin Heinrich and Anna Lozmann wrote: "We see material execution risk in UBS's integration of Credit Suisse."
They cited "the size and weaker credit profile" of Credit Suisse "and particularly the complexity in winding down a large part" of its investment banking operations.
Banking stocks boost FTSE 100
Stocks in London have moved higher as banks rose after fears of a banking crisis appeared to ease
The blue-chip FTSE 100 has advanced 1.3pc, extending gains after rising nearly 1pc on Monday.
Fears of a global banking meltdown have calmed after Swiss lender UBS agreed to buy its beleaguered rival Credit Suisse for £2.7bn over the weekend.
British banks climbed 2.7pc in early trading, with Barclays among the top gainers, last up 3.2pc.
Weakness in the pound also aided the exporter-heavy FTSE 100.
Investor focus would now shift towards the US Federal Reserve as the two-day monetary policy meeting begins later today.
The more domestically-focussed FTSE 250 midcap index added 1.4pc.
Among individual stocks, home improvement retailer Kingfisher rose 1.3pc after reporting its full-year earnings but has since fallen 0.1pc.
Tax cut is about cutting waiting lists, says PM
The tax cut for people with pension pots worth more than £1 million is about getting doctors to take on more work, the Prime Minister has insisted.
When it was put to him that he gave a big tax boost to some of the richest people in the country, Rishi Sunak told BBC Breakfast:
This is about cutting waiting lists.
You know, at this point, think about it, I'm sure almost every person watching this has in their extended circle of friends and family someone who is waiting for treatment.
We need our best doctors, our experienced doctors, we need them working, and they want to work, they want to help get the waiting lists down, they want to work longer hours, they don't want to retire. And because of the pension regime, they were stopped from doing that, it was preventing them from doing that.
And I want to get the waiting list down and that's why we've made the change that we've made, and it's going to benefit everyone to get health care quicker.
Cost of energy bills support reaches £34bn
The cost of energy support has now reached about £34bn since it was put in place last October.
It was devised to help households and businesses cope with rocketing gas and electricity bills following Russia's invasion of Ukraine.
Chancellor Jeremy Hunt announced in last week's Spring Budget that the energy price guarantee capping bills at £2,500 a year will be extended for households for another three months, from April to June.
However, the rising cost of the scheme should slow as the Ofgem price cap reduces in April from £4,279 to £3,280, cutting the annual average amount that the Government subsidises each household energy bill from £1,779 to £780.
Calm in markets echoes Lehman Brothers collapse, analyst warns
It is too early to "call the all clear" from the Credit Suisse turmoil after stock markets rose in Asia and London, an analyst has warned.
The calm in markets following the £2.7bn takeover of the 167-year-old lender by UBS is reminiscent of the period after the collapse of investment bank Lehman Brothers, according to Luke Hickmore, investment director at abrdn.
He said that reassurances from the ECB and the Bank of England that shareholders would lose capital first in the event of any future collapse, ahead of AT1 bondholders, "seems to have calmed everything down a bit".
The reverse happened with the UBS takeover on Sunday, sparking turmoil in global bond markets and in banking stocks on Monday as investors reassessed their portfolios before the ECB and Bank of England comments.
However, Mr Hickmore told BBC Radio 4's Today programme:
That seems to have calmed everything down. But one of the lessons from the collapse of Lehmans way back in 2007 is the market was very calm in the week afterwards.
I hope things have gone away and it's calmed down but it feels a bit early to call the all clear.
Markets rise as calm returns after Credit Suisse rescue
Markets have continued their rebound following the turmoil after the rescue of Credit Suisse by UBS.
The FTSE 100 has climbed 0.7pc after the open to 7,450.07 while the domestically focused FTSE 250 has risen 0.6pc to 18,607.75.
Investors 'concerned but hopeful' over Kingfisher, says law firm
After B&Q owner Kingfisher said it expects another drop in profits this year, Gowling retail partner Sarah Riding said:
With the cost of living crisis pinching consumers and demand for renovations dipping since the Covid-19 lockdowns ended, Kingfisher's trading has taken a hit as more people pull back on their spending.
This is affecting the sector as a whole, and despite Kingfisher being one of the market leaders, inflationary pressures have meant the business is facing increased costs and needs to look at affordable options for customers if it is to regain some of its revenue.
Investors will be concerned but hopeful the home improvement market will remain buoyant and can weather the storm until the economic situation improves.
With the summer approaching and the recent Spring Budget giving some economic confidence going forward, chief executive Thierry Garnier will be focusing on regaining growth through new territories and maximising its e-commerce offering.
Government net debt 'to peak at 103.1pc of GDP in November'
Public sector net borrowing rose to £16.7bn in February, more than two times the figure in the same month last year, when it stood at £7.1bn. It was also higher than the consensus expectations among economists of £11.4bn.
However, debt interest payments in February stood at £6.9bn, which was £1.3bn lower than the same month the previous year and significantly lower than recent peaks in June and December.
Divya Sridhar, economist at PwC, said:
Looking ahead, the Office for Budget Responsibility (OBR) forecast a brighter fiscal outlook than previously expected.
The Budget measures announced last week spend around two-thirds of this improvement.
Borrowing in the financial year 2022-23 is expected to be 14pc lower than forecasted in November last year. This is a result of larger receipts and a fall in public spending due to a faster than expected decline in energy prices.
In the medium term, the OBR expects borrowing to be £10bn lower on average each year from financial year 2023-24 to the end of their forecast horizon as compared to their forecasts in November.
Net government debt forecasts have also improved relative to November and it is expected to peak next year at 103.1pc of GDP before starting to fall.
Chancellor might have 'a bit of money to play with' in autumn, say economists
The latest public sector debt figures show some encouraging signs for Jeremy Hunt, according to Capital Economics.
Deputy chief UK economist Ruth Gregory said:
With only one month of this fiscal year still to go, cumulative borrowing is £132.2bn, well below the full-year deficit of £152.4bn (6.1pc of GDP) expected by the OBR in last week's Budget.
So there is a good chance of a lower borrowing total for 2022/23.
What's more, the Office for National Statistics has yet to include the impact of previous policy reforms to student loans.
When it does next month, this could push borrowing down by an extra £8.6bn in 2022/23.
Given all this, the Chancellor might therefore have a bit of money to play with in the fiscal event in the autumn, not least because the year in which the fiscal rule is judged rolls on from 2027/28 to 2028/29.
But the big risk is that the turmoil in the banking sector deepens the economic downturn and the recent improvement in the public finances is blown away.
B&Q owner expects profits to drop this year
Kingfisher, the company behind Screwfix and B&Q, has said it expects profit to drop again this year after reporting a more than 20pc fall in the 12 months to the end of January.
The business said adjusted pre-tax profit had dropped to £758m over the last financial year.
This year it expects a further drop to around £633m - in line with what analysts have forecast.
It would put the company well behind its pandemic highs, but still ahead of the £544m it made in the year to January 2020.
Government debt equal to 99.2pc of GDP
Public sector debt excluding public sector banks was £2,507.3bn at the end of February 2023, or around 99.2pc of gross domestic product, according to the Office for National Statistics:
Public sector net borrowing (excluding public sector banks) was £16.7 billion in February 2023.
This was the highest February total since records began, largely because of spending on energy support schemes.
➡️ https://t.co/eEaU2HoHvy pic.twitter.com/4ILpvlCGgy
— Office for National Statistics (ONS) (@ONS) March 21, 2023
Public sector debt excluding public sector banks was £2,507.3 billion at the end of February 2023, or around 99.2% of gross domestic product.
A debt-to-GDP ratio last seen in the early 1960s.
➡️ https://t.co/eEaU2HoHvy pic.twitter.com/rHvCU9heBg
— Office for National Statistics (ONS) (@ONS) March 21, 2023
Lower inflation will bring down borrowing, says Hunt
After record February Government borrowing figures, Chancellor Jeremy Hunt said:
Borrowing is still high because we're determined to support households and businesses with rising prices and are spending about £1,500 per household to pay just under half of people's energy bills this winter.
What will bring these costs right down is lower inflation, which is why it remains one of our top priorities to halve it this year, alongside growing our economy and reducing debt.
Government borrowing significantly lower than December
The cost of the energy support schemes pushed public borrowing to its highest ever February-level since records began 30 years ago.
Senior economics reporter Eir Nolsøe has been looking at the numbers:
The Office for National Statistics (ONS) said the Treasury borrowed £16.7bn last month to make up for the difference in tax receipts and the cost of public services.
It is £9.7bn more than February last year and comes even as gas prices have fallen sharply amid a brightening economic outlook.
While the large figure comes after January's better-than-expected data showed a surplus, it is still significantly smaller than the £27.4bn borrowed in December.
Meanwhile, the cost of servicing the national debt was £6.9bn, which is roughly similar to in January. It is largely because of the portion of so-called linkers - government bonds where the interest rate is tied to the retail price index.
The data also shows that in the financial year to February, the public sector borrowed £132.2bn, making it the third highest such period since the data series began in 1993.
Markets rebound after Credit Suisse turmoil
Asian markets bounced overnight from the previous day's rout, with lenders boosted by easing concerns of another financial crisis.
The panic that characterised trade over the past 11 days appeared to have faded after authorities in leading economies pledged support for depositors and troubled banks following the collapse of Silicon Valley Bank and Signature Bank in the United States.
Still, the takeover of troubled Credit Suisse by UBS for £2.7bn fanned concerns about what could be next on the chopping block, and analysts warned it was too early to say that the crisis was over.
The move to save Credit Suisse aimed to prevent a wider crisis as it is among the 30 global banks considered "too big to fail".
All three main indexes on Wall Street ended on the front foot - with the Dow more than one percent up - while European markets were also comfortably higher, helped by promises of support from the Fed and other central banks as well as the saving of Credit Suisse.
However, embattled First Republic Bank collapsed almost 50pc, despite a coalition of US lenders saying they would inject $30bn into it.
Public sector net borrowing in February stood at £16.7bn in February - a record number for the month.
It was £9.7bn more than the same month last year and the highest February borrowing since monthly records began in 1993.
This was largely because of the Government's substantial spending on its Energy Price Guarantee, keeping average annual household bills at £2,500 over the winter.
5 things to start your day
1) Row breaks out between Brussels and the Swiss over Credit Suisse rescue deal | ECB and Bank of England rebuke Swiss regulator for forcing bond holders to bear losses
2) Financial turmoil will force Bank of England to abandon rate rise, City predicts | Barclays scraps rate rise prediction as turmoil in the financial markets continues
3) How debt markets could still derail the rescue of Credit Suisse | Spike in UBS’ credit default swaps suggests the bank has bitten off more than it can chew
4) Ulez should be in every British city, says Uber’s UK chief | Andrew Brem praises Sadiq Khan's controversial scheme as Uber plans electric shift
5) Startups urged to pull cash from small US banks to protect themselves | Advice from VC firms follows the collapse of Silicon Valley Bank
What happened overnight
Asian stocks were lifted from lows on Tuesday, with the rescue of Credit Suisse stemming selling in bank shares, though the mood was fragile and the stress in markets had traders wondering whether U. rate hikes might be finished.
MSCI's broadest index of Asia-Pacific shares outside Japan climbed 0.5pc in early trade, Australian shares bounced 1.3pc from Monday's four-month trough and the Hang Seng opened 0.7pc higher..
Overnight an early selloff in Europe was reversed and on Wall Street the S&P 500 rose 0.9pc. US futures rose 0.2pc in early Asia trade.
Wall Street's main equity indexes rebounded on Monday as investors piled into banking stocks after UBS's state-backed rescue of embattled rival Credit Suisse for now allayed contagion concerns.
The Dow Jones Industrial Average finished at 32,244.58, up 1.pc. The broad-based S&P 500 gained 0.89% to close at 3,951.57, while the tech-rich Nasdaq Composite climbed 0.39pc to 11,675.54.
US Treasury yields rose ahead of the Federal Reserve's highly anticipated decision on interest rates on Wednesday.
The policy sensitive two-year yield moved upwards to 3.97pc, while the benchmark 10-year Treasury yield rose to 3.49pc.
The FTSE 100 bounced back from early trading lows to close 0.93pc higher at 7,403.85. Mining stocks lifted the blue-chip index as investors fled to safe-haven metals, offsetting shares in British lenders which weighed down the FTSE 100 and FTSE 250.
The more domestically-focused FTSE 250 midcap index nudged up 0.13pc by close.