US banks tightened lending standards in the first few months of this year, and expect to continue to do so for the rest of this year, a US Federal Reserve survey released on Monday said.
The report, which is closely watched on Wall Street, comes as the financial sector contends with deposit outflow worries on the back of turmoil after the high-profile collapse of Silicon Valley Bank and Signature Bank in March.
In the past few weeks, shares of midsized banks were hit by brutal trading days, while investors remained on edge for a repeat of earlier episodes in which deposit runs precipitated or played a significant role in bank failures.
Asked about their outlook for lending standards over the rest of the year, “banks reported expecting to tighten standards across all loan categories,” the Fed said.
Among the most frequently cited reasons were an expected deterioration in the credit quality of loan portfolios and in customers’ collateral values, alongside reduced risk tolerance, the senior loan officer opinion survey on bank lending practices said.
Other reasons included “concerns about bank funding costs, bank liquidity position, and deposit outflows,” the survey said.
In the first quarter, respondents reported tighter standards and weaker demand for various types of loans to businesses and households, the report said.
“In general, the tightening in standards for business loans was more frequently reported across the mid-sized banks,” it said.
On commercial and industrial lending, midsized and other banks more often cited their liquidity positions and issues such as heightened concerns about the effect of legislative changes, and among banks’ worries was an uncertain economic outlook, the report said.
It was “hardly surprising” that many banks tightened lending standards across a range of loans in the first three months this year, Oxford Economics lead US economist Michael Pearce said in a note.
“The bigger concern is that a majority of banks plan to tighten standards further over the rest of the year,” he said. “That will starve firms and households of credit and help push the economy into recession in the second half of this year.”
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday obtained the government’s approval to inject an additional US$7.5 billion into its US subsidiary, the Department of Investment Review said in a statement. The department approved TSMC’s application of investing in TSMC Arizona Corp, which is engaged in the manufacturing, sales, testing and design of IC and other semiconductor devices, it said. The latest capital injection follows a US$5 billion investment for TSMC Arizona approved in June. The chipmaker has broken ground on two advanced fabs in Arizona with aggregated investments approved by the department totaling US$24 billion thus far. According to TSMC, the first Arizona
The lethal hack of Hezbollah’s Asian-branded pagers and walkie-talkies has sparked an intense search for the devices’ path, revealing a murky market for older technologies where buyers might have few assurances about what they are getting. While supply chains and distribution channels for higher-margin and newer products are tightly managed, that is not the case for older electronics from Asia where counterfeiting, surplus inventories and complex contract manufacturing deals can sometimes make it impossible to identify the source of a product, analysts and consultants say. The response from the companies at the center of the booby-trapped gadgets that killed 37
FRIENDLY TAKEOVER: While Qualcomm Inc’s proposal to buy some or all of Intel raises the prospect of other competitors, Broadcom Inc is staying on the sidelines Qualcomm Inc has approached Intel Corp to discuss a potential acquisition of the struggling chipmaker, people with knowledge of the matter said, raising the prospect of one of the biggest-ever merger and acquisition deals. California-based Qualcomm proposed a friendly takeover for Intel in recent days, said the sources, who asked not to be identified discussing confidential information. The proposal is for all of the chipmaker, although Qualcomm has not ruled out buying some parts of Intel and selling off others. It is uncertain whether the initial approach would lead to an agreement and any deal is likely to come under close antitrust scrutiny
SECURITY CONCERNS: The proposed ban on Chinese autonomous vehicle software and hardware would go into effect with the 2027 and 2030 model years respectively The US Department of Commerce today is expected to propose prohibiting Chinese software and hardware in connected and autonomous vehicles on US roads due to national security concerns, two sources said. US President Joe Biden’s administration has raised concerns about the collection of data by Chinese companies on US drivers and infrastructure as well as the potential foreign manipulation of vehicles connected to the Internet and navigation systems. The proposed regulation would ban the import and sale of vehicles from China with key communications or automated driving system software or hardware, said the two sources, who declined to be identified because the