FirstFT: Global regulators set sights on stricter banking rules

Global regulators are considering stronger rules on smaller banks and requiring all lenders to be prepared for faster runs on deposits after the recent financial turmoil shook confidence in banks and rocked markets on both sides of the Atlantic.

Policymakers gathered in Washington for the IMF and World Bank spring meetings last week told the Financial Times that the Basel Committee on Banking Supervision, which sets global standards, is focusing on the issues exposed by the demise of Silicon Valley Bank.

That could mean forcing medium-sized lenders such as SVB and now-defunct Signature Bank to comply with Basel rules on capital and liquidity, the people briefed on the talks told the FT. Currently the rules only apply to “internationally active” banks in the US — a group limited to the largest institutions. No timeframe has been set for these changes.

The Bank of England is also exploring a major overhaul of its deposit guarantee scheme after SVB’s collapse led to billions of pounds being withdrawn overnight from the failed lender’s UK arm.

People briefed on the BoE’s thinking said the reforms could include boosting the amount covered for businesses and forcing banks to pre-fund the system to a greater extent to ensure faster access to cash when a lender collapses.

Here’s what I’ll be keeping tabs on today:

  • Earnings: Retail broker Charles Schwab is the latest financial services company to report earnings.

  • Monetary policy: Richmond Fed president Thomas Barkin is scheduled to deliver a speech in Virginia.

  • SpaceX: Elon Musk’s company is scheduled to make its first attempt to launch Starship, the most powerful rocket ever to be launched into space.

Today we’re launching One Must-Read, a new newsletter that features a single remarkable piece of journalism every weekday. If you haven’t already, sign up here.

Five more top stories

1. A Delaware judge has delayed the start of the Fox News-Dominion Voting Systems trial by a day, raising expectations of a last-minute settlement. The $1.6bn defamation lawsuit was due to start today but in a statement issued last night Judge Eric Davis said the trial would now start tomorrow. Read more on the trial here.

2. Prices of new homes in China rose at the fastest pace in 21 months in March, the latest example of how quickly the world’s second-largest economy is recovering following the end of the zero-Covid policy. The latest upbeat data comes ahead of first-quarter GDP which is scheduled for release tomorrow.

3. Almost 100 civilians have been killed in “bloody chaotic fighting” in Sudan between the army and a rival paramilitary group. The UN, US, EU, Russia and China have urged both sides to halt the clashes which erupted on Saturday. Read more on efforts to broker peace.

4. Merck has agreed to buy San Diago-based Prometheus Biosciences for $10.8bn as the US drugmaker bolsters its pipeline ahead of the possible loss of exclusivity over its best-selling cancer drug later this decade.

5. G7 countries pledged to “accelerate the phaseout of unabated fossil fuels so as to achieve net zero in energy systems by 2050” at the end of their summit in the Japanese city of Sapporo yesterday. The agreement was reached after weeks of fraught negotiations and claims the world’s most advanced economies were backtracking on their climate targets because of the Ukraine war.

The Monday interview

Mohammed Alardhi, executive chair at Investcorp
Mohammed Alardhi took over the cockpit at Investcorp in 2015 © Charlie Bibby/FT

Mohammed Alardhi, who realised his dream of becoming a pilot and rose to be chief of Oman’s Air Force, sees a link between his teenage self’s need for speed and his current role as executive chair of Investcorp, the fast-growing Bahrain-based investment manager. “The pushing of the envelope — that’s still what I try to do,” the 61-year-old tells senior business writer Andrew Hill. Read the full interview.

We’re also reading . . . 

  • Military briefing: As the first phase of Ukraine’s spring counter-offensive approaches, the stakes could not be higher.

  • US immigration: The return of migrant dynamism could mean good things for American growth and the fight against inflation, writes Rana Foroohar.

  • Gates Foundation: The Bill & Melinda Gates Foundation is making an unusual investment in a French biotech start-up’s experimental cancer trial.

Chart of the day

US president Joe Biden’s sweeping subsidies under the Chips Act and the Inflation Reduction Act are beginning to bear fruit. Investment committed in semiconductor and clean-tech production since August is almost double that in 2021 and nearly 20 times that of 2019, according to the FT’s analysis.

Take a break from the news

A woman in a night train
A woman in a night train © Ambroise Tézenas

As cheap flights lose their allure, the sleeper train is being reborn as an environmental — and romantic — alternative. Read more in the Weekend Essay.

Additional contributions by Tee Zhuo and Annie Jonas