Investors update: March 27 2023 - First Citizens to buy large chunk of failed Silicon Valley Bank

First Citizens to buy large chunk of failed Silicon Valley Bank

Highlights

• First Citizens Bank & Trust Co will buy Silicon Valley Bank’s deposits and loans, the Federal Deposit Insurance Corporation has said, just over two weeks after the biggest US banking collapse since Lehman Brothers.
• The deal includes the purchase of approximately $72 billion of SVB assets at a discount of $16.5 billion, but around $90 billion in securities and other assets will remain in receivership for disposition by the FDIC.
• This development comes after the regulator transferred all SVB deposits and assets into a new “bridge bank” earlier this month in an effort to protect depositors of the failed lender.

Source: The Guardian

Our Takeaway

One the bank of choice for startups and tech companies, SVB was taken over by regulators after a bank run began, which eventually led to its demise and triggered the worst banking crisis since the 2008 financial crash. News of the sale led to shares in European lenders mounting a partial recovery on Monday morning, with an index of Europe’s top banks rising 1.4%, after some major losses last week.

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EM stocks, currencies remain pressured amid banking crunch

Highlights

• Emerging market stocks and currencies dipped on Monday in a dull start to the final week of the first quarter as fears about a global banking crunch persisted, with South Africa’s rand down ahead of a central bank decision later this week.
• EM stocks carried declines over from Friday when Germany’s biggest lender Deutsche Bank shares plunged alongside a sharp jump in the cost of insuring its bonds against the risk of default.
• The MSCI’s index for EM equities fell 0.9%, down for the second straight day and on track for a small 1% gain in the first quarter.

Source: CNBC

Our Takeaway

A largely positive outlook for developing economy assets that saw them attract investors in the final months of 2022 and the start of this year has fizzled out amid concerns over growth and interest rates and the banking sector. But we expect some respite in the coming weeks as regulators move to maintain confidence in their respective banking industries. After the Swiss central bank negotiated a deal that saw the merger of UBS and the troubled Credit Suisse, news emerged Monday that the failed Silicon Valley Bank will be bought by First Citizens.

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Mastercard partners Tanzania’s Tigo, Selcom on digital payments

Highlights

• Tigo Tanzania, Selcom, and Mastercard Inc. have partnered to launch a digital payment service, through the Tigo Mastercard virtual service via Selcom’s card-as-a-service (CaaS) platform.
• The three-way deal is expected to enable Tigo Pesa customers to transact on global payment platforms and also benefit from Mastercard’s technology, which would enable new digital commerce opportunities for consumers and merchants.
• More so, the launch of the virtual card will ensure Tigo’s ability to provide its customers access to products and services previously a preserve of physical credit card holders while diversifying its mobile money portfolio.

Source: ABC

Our Takeaway

Digital payments have rapidly gained traction in Africa over the years, particularly in countries where traditional banking is limited. Mobile money platforms such as M-Pesa and MTN Mobile Money have transformed the way people access financial services. However, this rapid growth of digital payments has been uneven, with some countries like Kenya and Ghana far ahead of their regional counterparts like Tanzania and Nigeria. That means lots of opportunities still abound on the continent for global payments giants like Mastercard to expand their businesses via partnerships like the one above.