Have we seen the last of the bank bailouts?
What a fortnight it has been in the global banking space. It has certainly consumed each night on Money News. Credit Suisse has retained the title of world’s biggest banking basket case over the weekend, with a situation that at the time of writing looks to be resolved.
In a deal worth $US3 billion, the number one rival of Credit Suisse, UBS has agreed to takeover the embattled bank – if you need a comparison that’d be like one of our own Big Four banks agreeing to buy out another.
As part of the deal, the Swiss government said it would provide more than $US9bn to backstop some losses that UBS may incur by taking over Credit Suisse.
The deal was a timely one, with the settlement in place before affecting Asian markets, while here at home the result saw the Aussie dollar bounce and bond yields rise slightly higher.
And while there’s a pause in some of the chaos that kicked off more than a week ago with the collapse of Silicon Valley Bank, the worrying trend will play on the mind of the US Federal Reserve when it meets this week on interest rates.
While it was almost certain two weeks ago that the Fed would lift rates again by 0.5%, the handbrake has been well and truly applied after a significant week in banking. Markets are now pricing in a rise of 0.25%, before the Fed pauses and assesses the damage that’s been done.
At home, despite the global turmoil, our own Reserve Bank was again backing our country’s strength. And after reading the minutes yesterday I do think the RBA will take a pause in April and keep rates on hold at 3.6%.
There's no doubt that we're in interesting economic times, and over the past few weeks I've had some really interesting conversations on Money News that you might find interesting:
- Professor Mark Humphery-Jenner School of banking and finance at UNSW business school on the problems in global banking system and what it means for you.
- Paul Fletcher, Shadow Minister for government services and the digital economy. The government will face further questioning over changes to superannuation and who it might affect.
Of course you can always tune in to Money News live 7pm Monday-Thursday on the Nine Radio network, or grab the podcast whenever suits you!