Banking crisis roundup - Monday
Quantum Commodity Intelligence – The banking crisis entered into a second week Monday, with contagion again spilling over into the commodities sector. Crude oil markets remained under pressure as the events played out.
* Switzerland's largest bank, UBS agreed to takeover of Credit Suisse for just 3 billion Swiss Francs ($3.2 billion), in a government-brokered deal. The Swiss government is also granting a 9 billion franc guarantee in liquidity assistance to UBS, to backstop certain losses, while the Swiss National Bank is offering UBS 100 billion-franc liquidity assistance.
* However, CNBC noted one section of Credit Suisse's bondholders is set to be wiped out following the takeover, causing them to see investments worth 16 billion Swiss francs ($17 billion) become worthless. But UBS ' acquisition of Credit Suisse could lead to big gains for the Swiss bank.
* Saudi National Bank, Credit Suisse's largest shareholder, will see the value of its stake, purchased for $1.5 billion in October, slump by $1.2 billion after the UBS deal, according to Bloomberg. Qatar and Norway will also take hits.
* Central banks including US Fed, Eurozone, Switzerland, the United Kingdom, Canada and Japan agreed on Sunday to provide dollar funding on a daily basis.
* The Euro banking system is well-equipped with capital and the probability of contagion due "very small", ECB policymaker Yannis Stournaras told CNBC on Monday. Likewise, ECB President Christine Lagarde told Parliament, "the ECB's policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed."
* At least two major banks in Europe are examining scenarios of contagion in the region's banking sector and are looking to the Federal Reserve and the ECB for stronger signals of support, two senior executives told Reuters.
* Morgan Stanley's Michael Wilson said the stress in the banking system marks what's likely to be the beginning of a painful and "vicious" end to the bear market in US stocks, Bloomberg reported.
* First Republic Bank was hit with a further downgrade by ratings agency S&P Global, pushing it further into junk status. S&P slashed the rating by a full three notches to "B-plus" from "BB-plus," warning another downgrade is possible.
* Forbes said it was still unclear how US officials will react to the banking crisis, but some clarity will come on Wednesday when the Federal Reserve meets for a pivotal interest rate decision.
* Reuters reported European bank bonds slumped on Monday following the Credit Suisse rescue by UBS as the wipeout of some bondholders raised concerns around broader bank capital and further hit bank shares.
