Latest on the banking crisis and global markets

A week after Signature Bank failed, the Federal Deposit Insurance Corporation said it has sold most of its deposits to Flagstar Bank — a subsidiary of New York Community Bank.

On Monday, Signature Bank’s 40 branches will begin operating as Flagstar Bank. Signature customers won’t need to make any changes to do their banking Monday.

New York Community Bank bought substantially all of Signature’s deposits and a total of $38.4 billion worth of the company’s assets. That includes $12.9 billion of Signature’s loans, which New York Community Bank purchased at a steep discount — it paid just $2.7 billion for them. New York Community Bank also paid the FDIC stock that could be worth up to $300 million.

At the end of last year, Signature had more than $110 billion worth of assets, including $88.6 billion of deposits, showing how the run against the bank two weeks ago led to a massive decline in deposits.

Not included in the transaction is about $60 billion in other assets, which will remain in the FDIC’s receivership. It also doesn’t include $4 billion in deposits from Signature’s digital bank business.

As the banking crisis spreads, banks have grown increasingly wary of taking on risk. That’s likely why New York Community Bank was unwilling to take on all of Signature’s assets.

The FDIC said Sunday it expects to sell off those assets over time, and the total cost to the government will ultimately be about $2.5 billion.

Global oil prices fell more than 2% early Monday, with US crude trading around $65 a barrel and international benchmark Brent crude around $71, as a selloff in global banking stocks resumed despite dramatic weekend action to shore up confidence.

Stress in the banking industry could slow economic growth, reducing demand for energy, as lenders become warier about extending credit to businesses and households.

Goldman Sachs believes that the American economy has a 35% chance of entering a recession within a year — up from 25% before the banking sector meltdown started.

Meanwhile, gold prices jumped 1.7% to trade at $2,004 per ounce — the highest price since March 8, 2022.

Gold often benefits from increased demand during times of economic uncertainty. It also becomes more attractive to investors when interest rates are low.

The market turmoil unleashed 10 days ago by the collapse of Silicon Valley Bank has prompted many analysts to dial down their expectations for interest rate hikes by the Federal Reserve and Bank of England this week.

European markets have opened lower as concerns over the banking sector remain.

On Sunday, Switzerland's biggest bank, UBS, agreed to buy Credit Suisse in an emergency rescue deal aimed at stemming financial market panic unleashed by the failure of two American banks earlier this month. UBS is paying 3 billion Swiss francs ($3.25 billion) for Credit Suisse, about 60% less than the amount the bank was worth when markets closed on Friday.

Just hours after the deal was announced, the US Federal Reserve and several other major central banks announced a coordinated effort to boost the flow of US dollars through the global financial system with the aim of keeping credit flowing to households and businesses.

Asia Pacific stocks fell on Monday, even as regulators across the region sought to assure investors that their money was safe in the wake of a bailout for Credit Suisse and coordinated efforts by global central banks to boost liquidity in financial markets.

Both lenders are headquartered in London, but make most of their money in Asia.

Stephen Innes, managing partner of SPI Asset Management, said traders were on high alert because “the more policymakers do, the more investors expect more bad news to come down the pipe, which creates a horrible negative feedback loop.”

It’s “almost as if investors are asking themselves, ‘What do they know we do not know?’” he told CNN.

HSBC and Standard Chartered were facing greater scrutiny Monday as two global banks that had also “had their share of ups and downs,” according to Innes.

For Standard Chartered, recent speculation that the bank was a “takeover target” may be weighing on the stock, he said. Standard Chartered’s CEO told CNBC last month that the bank was “absolutely not” for sale.

HSBC, meanwhile, could be subject to investor jitters after buying the UK arm of Silicon Valley Bank, the lender that collapsed earlier this month, Innes said.

But some analysts predicted that markets could pick back up later on Monday if investor nerves settle.

— CNN’s Mark Thompson contributed to this report.

Shares in Credit Suisse have plunged in early trade after it agreed to a takeover from rival Swiss bank UBS at a huge discount to what the bank was worth on Friday.

In the opening minutes, Credit Suisse fell as much as 62%, UBS shares were 8% lower.

On Sunday, Switzerland's biggest bank, UBS, agreed to buy Credit Suisse in an emergency rescue deal aimed at stemming financial market panic unleashed by the failure of two American banks earlier this month.

UBS is paying 3 billion Swiss francs ($3.25 billion) for Credit Suisse — about 60% less than the amount the bank was worth when markets closed on Friday.

The Swiss central bank said in a statement that the agreement would "secure financial stability and protect the Swiss economy."

The US Federal Reserve and several other major central banks announced a coordinated effort Sunday night to boost the flow of US dollars through the global financial system with the aim of keeping credit flowing to households and businesses.

Sunday's statement came just hours after Swiss authorities orchestrated an emergency takeover of Credit Suisse by UBS. Credit Suisse — one of the 30 most important banks in the global financial system — was bleeding money last week after investor and customer confidence collapsed.

Market turmoil triggered by the second and third biggest bank failures in US history earlier this month is threatening to make it harder for people to borrow money, US Treasury Secretary Janet Yellen said last week.

"If banks are under stress, they might be reluctant to lend," Yellen said Thursday in testimony to the Senate Finance Committee. "We could see credit become more expensive and less available."

Christine Lagarde, president of the European Central Bank (ECB), told reporters Thursday that "persistently elevated market tensions" could further constrict credit conditions that were already tightening in response to rising interest rates.

Read more here.

Switzerland's biggest bank, UBS, has agreed to buy its ailing rival Credit Suisse in an emergency rescue deal aimed at stemming financial market panic unleashed by the failure of two American banks earlier this month.

"UBS today announced the takeover of Credit Suisse," the Swiss National Bank said in a statement. It said the rescue would "secure financial stability and protect the Swiss economy."

UBS is paying 3 billion Swiss francs ($3.25 billion) for Credit Suisse, about 60% less than the bank was worth when markets closed on Friday. Credit Suisse shareholders will be largely wiped out, receiving the equivalent of just 0.76 Swiss francs in UBS shares for stock that was worth 1.86 Swiss francs on Friday.

Extraordinarily, the deal will not need the approval of shareholders after the Swiss government agreed to change the law to remove any uncertainty about the deal.

Credit Suisse (CS) had been losing the trust of investors and customers for years. In 2022, it recorded its worst loss since the global financial crisis. But confidence collapsed last week after it acknowledged "material weakness" in its bookkeeping and as the demise of Silicon Valley Bank and Signature Bank spread fear about weaker institutions at a time when soaring interest rates have undermined the value of some financial assets.

Shares in the 167-year-old bank fell 25% over the week, money poured from investment funds it manages and at one point account holders were withdrawing deposits of more than $10 billion per day, the Financial Times reported. An emergency loan of nearly $54 billion from the Swiss National Bank failed to stop the bleeding.

But it did "build a bridge" to the weekend, to allow the rescue to be pieced together, Swiss officials said Sunday night.

"It is absolutely essential to the financial structure of Switzerland and ... to global finance," he told reporters.

Read more here.