A buyer for Silicon Valley Bank's deposits and loans helped shares in European lenders mount a partial recovery on Monday, after the sector was hammered last week by worries of systemic bank stress and a credit crunch.
There are also hopes for extra support for bank funding, after Bloomberg News reported US authorities were in early stage deliberation about expanding emergency lending facilities in an effort to contain the worst banking shock since the 2008 global financial crisis.
The sudden collapse of tech-focused\ SVB earlier this month destabilized the sector and drew some of Europe's biggest banking names into investors' focus. Indications that its failure is being resolved by authorities in a smooth manner could help underpin confidence.
Over the weekend, First Citizens BancShares Inc FCNCA.O bought all the loans and deposits of SVB and gave the Federal Deposit Insurance Corp equity rights in its stock worth as much as $500 million in return, the FDIC said in a statement.
Customers retain access to their accounts, North Carolina-based First Citizens said, and branches open on Monday. SVB's failure will cost its deposit insurance fund about $20 billion, the FDIC estimates.
"The move is positive for financial stability and the venture capital industry," said Gary Ng, senior economist at Natixis Hong Kong.
Banking stocks in Europe opened higher on Monday after a torrid previous session. Germany's biggest lender Deutsche Bank DBKGn.DE, which had slumped 8.5% on Friday alongside a sharp jump in the cost of insuring its bonds against the risk of default, rose 4.5% in early Monday trade.
A broader index of Europe's top banks rose 1.4%, after sliding nearly 4% in the previous session.
The First Citizens deal for SVB sealed the first weekend in several weeks that did not bring news of fresh banking collapses, rescues or emergency help from authorities.
"You sweep Silicon Valley off to another buyer, which is good," said IG Markets analyst Tony Sycamore in Sydney.
"But the bigger issue is guaranteeing deposits at all those other (US regional) banks...it's a little bit of calm before the next storm."
Last week ended with indicators of financial market stress flashing.
On Monday, bank shares in Asia were mixed - mostly steady in Australia .AXFJ and Tokyo .IBNKS.T but slipping in Hong Kong .HSCIF, where Standard Chartered 2888.HK shares fell nearly 4% as prices caught up with the wild Friday in Europe.
The collapse of SVB has sent US depositors fleeing smaller banks for larger cousins while the hit to confidence forced Credit Suisse into the arms of rival UBS UBSG.S last week.
In March, the Stoxx index of European bank shares .SX7P is down more than 18% and the US KBW regional bank index .KRX has lost 21%, with investors on edge about what's next.
Reuters