Moody’s reviews six US lenders
Moody’s Investors Service has put First Republic Bank and five other US lenders under review for downgrade, signaling concern over the health of regional financial firms following Silicon Valley Bank’s collapse. Moody’s has cited the lenders’ reliance on uninsured deposit funding and unrealized losses in their asset portfolios as the reason for this decision. The other lenders that have been put on review by Moody’s are Western Alliance Bancorp., Intrust Financial Corp., UMB Financial Corp., Zions Bancorp., and Comerica Inc.
Meta to cut thousands of jobs
Mark Zuckerberg is set to start another round of cuts to Meta’s workforce on Wednesday as he aims to reduce costs during the “year of efficiency.” The $469bn social media company is preparing to cut thousands of jobs due to the economic slowdown that has impacted its earnings. This is in addition to the job reductions announced last year, which affected 11,000 jobs from a workforce of 87,000. A growing number of senior leaders have also left the company recently, adding to the internal uncertainty. Vice-president of the sales organization for the Americas, Nada Stirratt, has resigned on Monday, and chief business officer Marne Levine left in February.
Credit Suisse addresses weaknesses
Credit Suisse Group AG has announced a new plan to address “material weaknesses” in its reporting and control procedures over the last two years. This move comes after a fresh review of its financial statements was prompted by concerns raised by US regulators last week. Credit Suisse has acknowledged that for 2021 and 2022, its internal control over financial reporting was not effective, and its disclosure controls and procedures were also not effective. The bank has identified material weaknesses related to the failure to design and maintain effective risk assessments in its financial statements. The reassessment of the bank’s internal controls comes in parallel with an “adverse opinion” issued by PwC on the effectiveness of the group’s internal controls. However, the bank has stated that its financial condition is “fairly presented” in its statements for 2022 and 2021.
US Major banks see surge in deposits
Major US banks are experiencing a surge in requests from customers looking to transfer funds from smaller lenders following the collapse of Silicon Valley Bank. Executives claim that this movement of deposits is the largest seen in over a decade. In response, JPMorgan Chase, Citigroup, and other large financial institutions are taking extra steps to accommodate customers who want to move their deposits quickly. Emergency measures unveiled by the US government, including a new Federal Reserve lending facility for banks, seem to have passed their first major test by preventing a third bank from failing following the implosion of SVB and Signature Bank. However, depositors are still trying to move balances into larger banks such as JPMorgan, Citi, and Bank of America, as well as money market funds, especially when balances exceed the $250,000 threshold guaranteed by federal insurance.
Japan’s banks hit by sell-off
Japan’s biggest banks experienced a sharp decline in shares on Tuesday due to a US banking sector sell-off and uncertainty over interest rates following the collapse of Silicon Valley Bank. Tokyo traders anticipate a second day of massive equity market support from the Bank of Japan to fend off a deeper rout. The Topix Banks index of Japan was down as much as 7.8%, on track for its worst day in more than three years, while the Topix fell more than 3.1%.
TikTok accused of mishandling allegations
TikTok has been accused of mishandling allegations of sexual misconduct and harassment against a senior manager in London. This highlights longstanding concerns about the working culture at the fast-growing social media platform. Four women who worked with Steve Ware, former head of TikTok’s UK ecommerce studio operations, allege that he made inappropriate sexual comments and advances to young female staff members and clients, including influencers who create content on the app. These issues follow previous claims about failures to address formal HR complaints against senior staff and concerns about the working culture at the short-form video app owned by China’s ByteDance.
Siemens seeks investment in Southeast Asia
Siemens is seeking investments in Southeast Asia to diversify away from China as multinationals work to reduce supply chain risks amidst geopolitical tensions between the West and Beijing. The German group, one of the world’s largest industrial conglomerates, is adding staff and considering the addition of factories in fast-growing economies such as Indonesia, Vietnam, and Thailand. Many multinationals are becoming wary of their dependence on China due to rising tension between Washington and Beijing. US efforts to curb China’s access to cutting-edge technology and the country’s former Covid-19 policy, as well as slowing growth, are causing supply chain disruptions.
Saudia to Purchase 80 Boeing Dreamliners
Two Saudi Arabian airlines are close to a deal to purchase about 80 Boeing Co. 787 Dreamliners with options for 40 more. The newly launched airline Riyadh Air, created by the Saudi sovereign-wealth fund over the weekend, is expected to commit to purchasing 39 of the wide-body jets, while existing carrier Saudia is expected to buy the same number of jets. The agreement, which may be announced as early as Tuesday, is expected to come with options to buy approximately 40 additional Dreamliners among the airlines. The Boeing aircraft order is reportedly valued at about $35 billion.
KPMG Faces Scrutiny After Bank Failures
Silicon Valley Bank failed just 14 days after KPMG LLP gave the lender a clean bill of health. Signature Bank went down 11 days after the accounting firm signed off on its audit. KPMG’s knowledge of the two banks’ financial situation and what it may have missed is likely to be the subject of regulatory scrutiny and lawsuits. On February 24, KPMG signed the audit report for Silicon Valley Bank’s parent, SVB Financial Group. Regulators seized the bank on March 10 after a surge of withdrawals threatened to leave it short of cash.
Volkswagen to Invest $193 Billion in EV
Volkswagen AG announced that it will be increasing its five-year investment plan to €180 billion ($193 billion) as it ramps up efforts to challenge Tesla Inc.’s dominance in the electric vehicle market. The German automaker revealed that almost 70% of its planned expenditure for the next five years will be allocated to software and electric vehicles. This is a significant increase from the previous plan, where only 56% of the budget was dedicated to these areas. In comparison to its last annual update, the carmaker will be increasing its overall spending by 13%.