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IBERIAN DAILY 13 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ACS, BANKING SECTOR, CIE AUTOMOTIVE, MAPFRE, REDEIA.

“Black Friday” sinks global stock markets
It was a session of heavy losses in Europe (around -2%) after the panic that started on Thursday in the US due to Silicon Valley Bank’s liquidity problems. The drops spread to most of the main global indices, where only the Japanese Nikkei avoided losses last week. Thus, in the Euro STOXX, Travel & Leisure was the only sector ending the week in positive numbers, with Real Estate and Basic Materials suffering the biggest losses. On the macro side, in Spain January’s retail sales rose to +7.1% (almost doubling the rate from the previous month). In Germany, February’s final inflation data remained unchanged at 8.7% YoY. In the US, February’s job creation was stronger than expected, but the unemployment rate rose (due to a bigger increase in active population), and salary gains rose less than expected. Separately, on Friday SVB collapsed and on Sunday the state regulator ordered the closure of Signature bank in NY, while the Fed, FDIC and the Treasury announced protection schemes for savings, with the former also announcing a Bank Term Funding Programme (BTFP) to alleviate liquidity problems and protect savings (the UK was seeking out a buyer for SVB’s subsidiary in the country).
What we expect for today
The European stock markets would open with gains of up to +0.5%, with growth stocks benefitting from the drop in rates. Currently, S&P futures are up +1.8% (the S&P 500 ended -1.01% lower vs. the European closing bell). Volatility in the US rose (VIX 24.80). Asian markets are mixed (China’s CSI 300 +0.8% and Japan’s Nikkei -1%).
Today we highlight the Eurogroup’s meeting.


COMPANY NEWS

BANKING SECTOR
Over the past few hours the Federal Reserve has announced a series of measures to avoid a spread to the rest of the financial system from the intervention of SVB (US$~200 Bn of assets) on Friday and Signature Bank (US$~100 Bn) this weekend. These measures include, among other, an additional 1Y liquidity line for the banking system and a guarantee on 100% of deposits in both banks (and vs. the current limit of US$ 250,000 per account holder), with the commitment that clients will be able to access their funds as soon as possible. The guarantee will be covered by the FDIC (US Federal Deposit Insurance Corporation) and by a special contribution from the banking system in the case the FDIC incurs losses.
As for SVB, the Federal Reserve ruled out a Government bailout and is working on auctioning off the bank after losses are absorbed by shareholders and some bond holders (bail-in).
Positive news that should contribute to ease the pressure on the flight of deposits in US banks and therefore reduce the risk of contagion to other banks. We reiterate our view that the impact on European banks (the European banking index fell -3.8% on Friday) can be ruled out for the time being.