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Friday’s action saw the S&P 500 up 0.8% and Toronto up 0.6%.
TFI International bounced up 5.7% after its loss on Wednesday after it posted earnings. It seems it’s hard to keep a good company down.
As of Sunday afternoon, the Federal Deposit Insurance Corporation is apparently taking bids for First Republic Bank which it will apparently then seize. It likely does not have the ability to force a buyout of the bank’s shares at any price. The potential buyer in this emergency fire sale will want to pay little or nothing plus they may want various guarantees that they will not lose money on the deal. There is probably zero chance that First Republic shareholders will see a dime from this. That likely sends more shockwaves through for other smaller banks. Why keep your deposits in a small bank? And why own shares in any small bank now that there have been multiple runs on deposits. It would be far better for stability if First Republic could have been sold or partially sold as a going concern, even at a very low price.
I’m fairly confident that Canadian Western Bank does not face these sorts of risks. It has not locked in low interest rate loans to any great extent at all. And a lot of its deposits are locked in (GICs). But unfortunately some businesses might still be more hesitant to keep money in CWB. I hope that’s not the case but the more these U.S. bank failures are in the news, the more chance that Canadian depositors in small banks also get a bit nervous, as share holders as well.