Credit Suisse under pressure to merge with UBS

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Written by northsouth

Category: Business-Commodities-Banking

Published: 18 March 2023

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By Stefania Spezzati, Oliver Hirt and Tom Sims

LONDON/NEW YORK - Credit Suisse Group AG (CSGN.S) began a make-or-break weekend after some rivals grew cautious in their dealings with the bank and regulators urged it to pursue a deal with Swiss rival UBS AG (UBSG.S).

Credit Suisse Chief Financial Officer Dixit Joshi and his teams will hold meetings over the weekend to assess strategic scenarios for the bank, people with knowledge of the matter said on Friday.

The 167-year-old bank is the biggest name ensnared in the market turmoil unleashed by the collapse of U.S. lenders Silicon Valley Bank and Signature Bank over the past week, forcing the Swiss bank to tap $54 billion in central bank funding.

After wild swings in the bank's share price this week, Credit Suisse had lost a quarter of its market value by Friday night.

To stamp out the crisis, Swiss regulators are encouraging UBS and Credit Suisse to merge but neither bank wants to do so, one source said. The regulators do not have the power to force the merger, the person said.

The boards of UBS and Credit Suisse were expected to separately meet over the weekend, the Financial Times said.

Credit Suisse and UBS declined to comment.

The mood in Switzerland, long considered an icon for banking stability, was pensive as executives wrestled with the future of the country's biggest lenders.

"Banks in permanent stress" read the front page headline of the Neue Zuercher Zeitung newspaper.

In a sign of its vulnerability, at least four of Credit Suisse's major rivals, including Societe Generale SA (SOGN.PA) and Deutsche Bank AG (DBKGn.DE), have put restrictions on their trades involving the Swiss bank or its securities, five people with direct knowledge of the matter told Reuters.

"The Swiss central bank stepping in was a necessary step to calm the flames, but it might not be sufficient to restore confidence in Credit Suisse, so there’s talk about more measures," said Frederique Carrier, head of investment strategy at RBC Wealth Management.

Efforts to shore up Credit Suisse come as policymakers including the European Central Bank and U.S. President Joe Biden sought to reassure investors and depositors the global banking system is safe. But fears of broader troubles in the sector persist.

Already this week, big U.S. banks provided a $30 billion lifeline for smaller lender First Republic (FRC.N), while U.S. banks altogether sought a record $153 billion in emergency liquidity from the Federal Reserve in recent days.

This reflected "funding and liquidity strains on banks, driven by weakening depositor confidence," said ratings agency Moody's, which this week downgraded its outlook on the U.S. banking system to negative.

In Washington, focus turned to greater oversight to ensure that banks - and their executives - are held accountable.

Biden called on Congress to give regulators greater power over the sector, including imposing higher fines, clawing back funds and barring officials from failed banks.

Some Democratic lawmakers asked regulators and the Justice Department to probe the role of Goldman Sachs (GS.N) in SVB's collapse, said the office of Representative Adam Schiff.

MARKET TROUBLES LINGER

Banking stocks globally have been battered since Silicon Valley Bank collapsed, raising questions about other weaknesses in the financial system.

U.S. regional bank shares fell sharply on Friday and the S&P Banks index (.SPXBK) posted its worst two-week calendar loss since the pandemic shook markets in March 2020, slumping 21.5%.

First Republic Bank ended Friday down 32.8%, bringing its loss over the last 10 sessions to more than 80%.

While support from some of the biggest names in U.S. banking prevented First Republic's collapse this week, investors were startled by disclosures on its cash position and how much emergency liquidity it needed.

INTEREST RATE RISK

The failure of SVB brought into focus how a relentless campaign of interest rate hikes by the U.S. Federal Reserve and other central banks was putting pressure on the banking sector.

Many analysts and regulators have said SVB's downfall was due to its specialised, tech-focussed business model, while the wider banking system was much more robust thanks to reforms adopted in the years after the global financial crisis.

However, a senior official at China's central bank said on Saturday high interest rates in the major developed economies could continue to cause problems for the financial system.

Uniting the world for water action

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Written by northsouth

Category: Business-Commodities-Banking

Published: 05 March 2023

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NEW YORK - In 1977, world leaders, water experts and policymakers from around the world gathered in Mar del Plata, Argentina, for the UN Water Conference. Almost 50 years later, the global community will come together from 22 to 24 March in New York for the second ever UN 2023 Water Conference.

By nature, water connects different environments, peoples and sectors. But growing demands for water, coupled with poor water management, have increased water stress around the world. Meanwhile, the effects of worsening climate change are often felt through water, in the form of floods or droughts. Something has to change.

Halfway into the Water Action Decade, our progress on water-related goals and targets remains alarmingly off-track, jeopardizing the entire sustainable development agenda.

The UN 2023 Water Conference will put water into the spotlight and onto global agendas. It seeks to mobilize States, the UN system and stakeholders alike to share and exchange knowledge, challenges and best practices, and forge new partnerships across sectors. Governance, innovation, data and financing all have a role to play in accelerating water action.

The Conference aims to help everyone better understand, value and manage water and take concerted action to achieve the internationally agreed water-related goals and targets. Water can be the dealmaker for the Sustainable Development Goals, and in turn for the health and prosperity of people and planet. Water action can increase food security and equality between genders, water action keeps children in school, communities at peace and nature healthy.

While briefing the General Assembly on his priorities for the year, Secretary-General António Guterres highlighted the need for water action and that we must “act decisively before it is too late”.

The time is now. The UN 2023 Water Conference is the once-in-a-generation opportunity to act for water.

5 things you should know about water and the UN 2023 Water Conference

Water is life. It connects us and is vital to our existence on this planet. To protect this critical resource, and accelerate actions to solve the water crisis, the world will come together for the UN 2023 Water Conference on 22-24 March. Here are 5 things you should know about water and the upcoming conference.

1. Water for health

Drinking water and sanitation are human rights. However, in 2020, 2 billion people did not use safely managed drinking water, and 3.6 billion people used sanitation services that leave human waste untreated, threatening human and environmental health. Globally, at least a quadruple rate of progress on water, sanitation and hygiene is needed to meet the SDG targets.

2. Water for sustainable development

Approximately 35% of treated water is currently lost in urban water systems. Water utilities bear the huge financial costs of treating and pumping water but lose revenues from leaked water that could have been sold. Policy, institutional, and regulatory reforms are needed for sustainable and equitable water use, valuing water properly, and improved service delivery.

3. Water for climate, resilience and environment

Nearly 95% of infrastructure loss and damage reported between 2010 to 2019 were due to water-related disasters. At least 1.4 billion people have been affected by droughts and 1.6 billion by floods for the same period. Sustainable use of water resources is fundamental to deal with the climate and environmental emergency and build resilience.

4. Water for cooperation

Transboundary rivers, lakes and aquifers are shared by 153 countries. But only a small proportion of (32) countries reported high (90% or more) coverage of their transboundary waters by operational arrangements in 2020. Joining the UN Water Conventions is a practical step to bolster political support for transboundary water cooperation.

5. Water Action Decade

As an outcome of the UN 2023 Water Conference, the Water Action Agenda will serve as a catalyst for actions and commitments by all countries and stakeholders. The Water Action Decade can facilitate efforts towards the achievement of the commitments, through its various workstreams on knowledge exchange, advocacy and communications.

Global economic recovery continues but remains uneven, OECD

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Written by northsouth

Category: Business-Commodities-Banking

Published: 21 September 2021

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PARIS - The global economy is growing far more strongly than anticipated a year ago but the recovery remains uneven, exposing both advanced and emerging markets to a range of risks, according to the OECD’s latest Interim Economic Outlook.

The OECD says extraordinary support from governments and central banks helped avoid the worst once the COVID-19 pandemic hit. With the vaccine roll-out continuing and a gradual resumption of economic activity underway, the OECD projects strong global growth of 5.7% this year and 4.5% in 2022, little changed from its May 2021 Outlook of 5.8% and 4.4% respectively.

Countries are emerging from the crisis with different challenges, often reflecting their pre-COVID 19 strengths and weaknesses, and their policy approaches during the pandemic. Even in the countries where output or employment have recovered to their pre-pandemic levels, the recovery is incomplete, with jobs and incomes still short of the levels expected before the pandemic.

Large differences in vaccination rates between countries are adding to the unevenness of the recovery. Renewed outbreaks of the virus are forcing some countries to restrict activities, resulting in bottlenecks and adding to supply shortages.

There is a marked variation in the outlook for inflation, which has risen sharply in the US and some emerging market economies but remains relatively low in many other advanced economies, particularly in the euro area.

A rapid increase in demand as economies reopen has pushed up prices in key commodities such as oil and metals as well as food, which has a stronger effect on inflation in emerging markets. The disruption to supply chains caused by the pandemic has added to cost pressures. At the same time, shipping costs have increased sharply.

But the Interim Outlook says that these inflationary pressures should eventually fade. Consumer price inflation in the G20 countries is projected to peak towards the end of 2021 and slow throughout 2022. Wage growth remains broadly moderate and medium-term inflation expectations remain contained.

The report warns that to keep the recovery on track stronger international efforts are needed to provide low-income countries with the resources to vaccinate their populations, both for their own and global benefits.

Macroeconomic policy support is still needed as long as the outlook is uncertain and employment has not yet recovered fully, but clear guidance is called upon from policymakers to minimise risks looking forward. Central banks should communicate clearly about the likely sequencing of moves towards eventual policy normalisation and the extent to which any overshooting of inflation targets will be tolerated. The report says fiscal policies should remain flexible and avoid a premature withdrawal of support, operating within credible and transparent medium-term fiscal frameworks that provide space for stronger public infrastructure investment.

Presenting the Interim Economic Outlook alongside Chief Economist Laurence Boone, OECD Secretary-General Mathias Cormann said: “The world is experiencing a strong recovery thanks to decisive action taken by governments and central banks at the height of the crisis. But as we have seen with vaccine distribution, progress is uneven. Ensuring the recovery is sustained and widespread requires action on a number of fronts – from effective vaccination programmes across all countries to concerted public investment strategies to build for the future.”

Ms Boone said: “Policies have been efficient in buffering the shock and ensuring a strong recovery; planning for more efficient public finances, shifted towards investment in physical and human capital is necessary and will help monetary policy to normalise smoothly once the recovery is firmly established.”