It’s a DONE DEAL

March 19 (Reuters) – UBS (UBSG.S) has agreed to buy Swiss banking giant Credit Suisse (CSGN.S) after increasing its offer to more than $2 billion, the Financial Times reported on Sunday, as authorities bid to stave off turmoil when the markets reopen.Officials have been racing to rescue the 167-year-old bank, among the world’s largest wealth managers, after a brutal week that saw the second- and third-largest U.S. bank failures in history. As one of 30 global banks seen as systemically important, any deal for Credit Suisse could ripple through global financial markets. At least two major banks in Europe are examining scenarios of contagion possibly spreading in the region’s banking sector and looking to the Federal Reserve and the European Central Bank to step in with stronger signals of support, two senior executives with knowledge of the discussions told Reuters. A person with knowledge of the talks earlier told Reuters that UBS sought $6 billion from the Swiss government as part of a possible purchase of its rival. The guarantees would cover the cost of winding down parts of Credit Suisse and potential litigation charges. NN: As the markets digest this deal I believe the depression is now fears come out  of the oil markets.. They did the deal just in time for Sunday Dibber…… No need to be savages!

UBS Group AG is offering to buy Credit Suisse Group AG for up to $1 billion in an all share deal to take over the stricken lender, according to the Financial Times.  Swiss authorities plan to change the country’s laws to bypass a shareholder vote on the transaction as they rush to finalize a deal before Monday, the newspaper reported on Sunday, citing four people with direct knowledge of the situation.   The offer was communicated on Sunday morning with a price of 0.25 francs a share to be paid in UBS stock, according to the report. UBS has also insisted on a material adverse change that voids the deal if its credit default spreads jump by 100 basis points or more, the people said. Credit Suisse closed down 8% to 1.86 francs at the close on Friday. A government-brokered deal would address a rout in Credit Suisse that sent shock waves across the global financial system over the past week when panicked investors dumped its shares and bonds following the collapse of several smaller US lenders. A liquidity backstop by the Swiss central bank briefly arrested the declines, but the market drama carries the risk that clients or counterparties would continue fleeing, with potential ramifications for the broader industry. The complex discussions over what would be the first combination of two global systemically important banks since the financial crisis have seen Swiss and US authorities weigh in, according to people with knowledge of the matter. Talks accelerated Saturday, with all sides pushing for a solution that can be executed quickly after a week that saw clients pull money and counterparties step back from some dealings with Credit Suisse. The two banks have had limited contact, with terms heavily influenced by the Swiss National Bank and regulator Finma, the Financial Times reported. The situation is very fast moving and there’s no guarantee a deal will be reached or that the terms will remain the same, the newspaper reported. The government is preparing emergency measures to allow the takeover to proceed at pace and plans to introduce legislation that will bypass the normal six-week consultation period required for UBS shareholders, the newspaper reported. NN: Sunday rumors are a deal is very very close. If the  problem child banks are saved the markets will breath a sigh of relief. Next its the FED on tap….. Tuesday

• Discount-window borrowing surged to record $152.85 billion
• New facility usage totaled $11.9 billion in first three days

Banks borrowed a combined $164.8 billion from two Federal Reserve backstop facilities in the most recent week, a sign of escalated funding strains in the aftermath of Silicon Valley Bank’s failure. Data published by the Fed showed $152.85 billion in borrowing from the discount window  — the traditional liquidity backstop for banks — in the week ended March 15, a record high, up from $4.58 billion the previous week. The prior all-time high was $111 billion reached during the 2008 financial crisis.

The data also showed $11.9 billion in borrowing from the Fed’s new emergency backstop known as the Bank Term Funding Program, which was launched Sunday.  Taken together, the credit extended through the two backstops show a banking system that is still fragile and dealing with deposit migration in the wake of the failure of Silicon Valley Bank of California and Signature Bank of New York last week.  Other credit extensions totaled $142.8 billion during the week, which reflects lending by the Federal Deposit Insurance Corp. to bridge banks for SVB and Signature Bank. On the other side, EPFR Global data cited by Bank of America Corp. showed money-market funds attracted $113 billion of inflows, the most since April 2020, while Treasuries drew the biggest inflows since May 2022 with $9.8 billion in the week through March 15.  All told, the emergency loans reversed around half of the balance-sheet shrinkage that the Fed has achieved since it began so-called quantitative tightening — allowing its portfolio of assets to run down — in June last year.

And the central bank’s reserve balances jumped by some $440 billion in a week — which “basically reversed all the Fed’s QT efforts,” according to Capital Economics. 

“It is about in line with what we expected,” said Michael Gapen, head of US economics for Bank of America Securities in New York. Gapen said the higher rates of discount-window borrowing over the new Bank Term Funding facility may reflect the broader set of collateral that banks are able to pledge at the window. On Thursday afternoon, the nation’s biggest banks agreed upon a plan to deposit about $30 billion with First Republic Bank in an effort orchestrated by the US government to stabilize the battered California lender.

Russia expects its oil and gas production to fall this year compared to 2022, partly due to the production cuts announced for March, Russian Energy Minister Nikolai Shulginov told lawmakers on Wednesday.  “For 2023, we expect oil production levels to be slightly lower, also because of the voluntary reduction in output,” Shulginov was quoted as saying by Russian news agency Interfax “Gas production volumes will continue to decline both due to the abandonment of the European market and the timing of the re-routing of energy flows to the East,” the Russian energy minister added. Russian Deputy Prime Minister Alexander Novak said  that Russia, a member of OPEC+, would voluntarily cut its oil production by 500,000 bpd in March as a result of the Western sanctions and the price cap on Russian oil.   Russia’s decision to reduce its oil production this month will help balance the global oil market, which is in a surplus now, Alexander Dyukov, chief executive of Russian oil company Gazprom Neft, said later in February. The Russian production cut could be “a sign that Moscow may be struggling to place all of its barrels,” or “may be an attempt to shore up oil prices,” the International Energy Agency (IEA) said in its Oil Market Report for February.  In the report for March published today, the IEA said, “It remains to be seen if there will be sufficient appetite for Russian oil products now that the price cap is in place or if its production will start to fall under the weight of sanctions.” “Revenues are already dwindling,” the agency noted. The Kremlin does not and will not recognize any price cap on its oil, Kremlin spokesman Dmitry Peskov said last week. Earlier in the week, U.S. Energy Envoy Amos Hochstein had said that the price cap on Russia’s crude oil and oil products was working well.

The OPEC+ group will keep its oil production targets unchanged until the end of the year in view of the high level of uncertainty on the global markets and with global economic growth, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, told Energy Intelligence in an interview this week.   “There are those who continue to think that we would adjust the agreement before the end of year. For those I say they need to wait until Friday, Dec. 29, 2023 to demonstrate to them our commitment to the current agreement,” the energy minister of OPEC’s top producer and the world’s largest crude oil exporter told Energy Intelligence.   Last October, the OPEC+ alliance decided to cut their collective production quota by 2 million barrels per day (bpd), although the actual cut is estimated at around half of that volume, due to many members of the pact under-producing compared to their targets. Many bullish and bearish factors are currently at play in the oil market, influencing sentiment, the Saudi energy minister told Energy Intelligence in the interview. China’s recovery is underway, but there is uncertainty about how long it would take. The global economy will grow, although the pace of growth is uncertain, Prince Abdulaziz bin Salman said.  “The interplay of these and other factors limits clarity, and the sensible and only course of action in such an uncertain environment is to maintain the agreement we struck last October for the rest of this year and that is what we intend to do,” he said. “We need to ascertain that the positive indicators are sustainable.” China’s reopening is set to add momentum to global economic growth, OPEC said in its Monthly Oil Market Report (MOMR) this week, and revised up its forecast for Chinese oil demand growth this year.  “In the emerging economies, China’s reopening, following the lifting of the strict zero-COVID-19 policy, will add considerable momentum to global economic growth,” OPEC said in the report.

S. Arabia will not sell oil to nations imposing price caps

Famed investor Carl Icahn believes the U.S. economy is in trouble because of poor corporate leadership and stubbornly high inflation. “The system is breaking down, and we absolutely have a major problem in our economy today,” Icahn said “One of the worst countries in the world as far as corporate governance.”

Carl Icahn: “Our System Is Breaking Down”

Billionaire investor Carl Icahn says the collapse of Silicon Valley Bank and others shows that the U.S. issues ‘too much capital,’ and too much money causes inflation. “our system is breaking down,” noting that “we absolutely have a major problem in our economy today.” While refraining from opining on bank bail outs or not, Icahn “you can’t have the country feeling that it doesn’t matter if they save, it doesn’t matter, because they could spend all the money they want.” Icahn says one major reason for the break down is “that you don’t have good corporate leadership.” That’s a problem, Icahn says. “If you don’t have good corporate leadership, companies, you know, when the tide is high, and things are great, it doesn’t matter, and all these guys that are running these companies are partying and having a good time and giving themselves bonuses.” Icahn also revealed why he and Warren Buffet do so well. “Because we go into companies and clean them up. There’s so much to clean up and it’s getting much worse now. One of the worst countries in the world as far as corporate governance goes, and I can go on and on about that.”