China’s war games saw planes, ships and personnel sent into ‘the maritime areas and air space of the Taiwan Strait, off the northern and southern coasts of the island, and to the island’s east’, the army said as it launched the exercises, engineered to flex Beijing’s military muscles in front of Taiwan and the world.
Western Alliance Bancorp tumbled 21% and PacWest Bancorp dropped 38% after those stocks were halted several times due to volatility.
Charles Schwab Corp slumped more than 11%. Signature Bank dropped about 23%, while San Francisco-based First Republic Bank fell 15%.
A report from state broadcaster CCTV on Sunday said drills had ‘simulated joint precision strikes against key targets on Taiwan island and surrounding waters’, adding that forces ‘continued to maintain the situation of closely encircling the island’.
Tsai returned to Taiwan on Friday after visiting her island’s dwindling band of official diplomatic allies in Latin America, with two US stopovers that included meetings with McCarthy and other lawmakers.
It comes as Chinese fighter jets and warships simulated strikes on Taiwan Sunday as they encircled the island during a second straight day of military drills that were launched in response to its president, Tsai Ing-Wen, meeting the US House speaker.
Some experts, however, see the fallout from the latest collapse as limited. “We do not see this as the start of a broader threat to the safety and soundness of the banking system,” TD Cowen analyst Jaret Seiberg said on Friday.
“Silicon Valley had a unique business model that was less dependent on retail deposits than a traditional bank.” (Reporting by Lananh Nguyen, Paritosh Bansal, Tatiana Bautzer, Nupur Anand and Ira Iosebashvili in New York and by Pete Schroeder, Jason Lange Sarah N.
In the UK, where SVB has a local subsidiary, finance minister Jeremy Hunt said on Sunday he was working with Prime Minister Rishi Sunak and the Bank of England to “avoid or minimise damage” resulting from the chaos that has engulfed the lender.
Kyle Bass, founder and chief investment officer of Hayman Capital Management, who also does not have exposure to SVB, told Reuters that the Fed needed to “arrange a marriage” for SVB by Sunday evening, before markets opened in Asia.
“Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out…and the reforms that have been put in place means we are not going to do that again,” she said.
The ministry said it was monitoring Chinese military ‘movements through (a) joint intelligence surveillance and reconnaissance system’, adding the warplanes detected until 12 pm local time (0400 GMT) included a mix of fighter jets and bombers.
Reuters was unable to determine whether a deal for the bank was forthcoming.
Some industry executives said such a deal would be sizeable for any bank and would likely require regulators to give special guarantees and make other allowances for any buyer.
In Washington, a State Department spokesperson said the United States had ‘consistently urged restraint and no change to the status quo’, but noted it had ample resources to fulfil its security commitments in Asia.
The Federal Deposit Insurance Corporation (FDIC), which was appointed receiver, was trying to find another bank over the weekend that was willing to merge with Silicon Valley Bank, people familiar with the matter said on Friday.
Startup-focused lender SVB Financial Group on Friday became the largest bank to fail since the 2008 financial crisis, roiling markets and leaving billions of dollars belonging to companies and investors stranded.
‘These operations serve as a stern warning against the collusion between separatist forces seeking “Taiwan independence” and external forces and against their provocative activities,’ said Shi Yin, a PLA spokesman.
House of Representatives Speaker Kevin McCarthy told Fox News’ Sunday Morning Futures program that the Biden administration and the Federal Reserve were working to come up with announcement before the markets open, without specifying any details.
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