By Jonathan Stempel

NEW YORK (Reuters) -A U.S. judge on Thursday denied Archegos Capital Management LP founder Bill Hwang’s effort to dismiss an indictment accusing him of fraud in the collapse of his once-$36 billion firm.

U.S. District Judge Alvin Hellerstein in Manhattan rejected arguments that the 11-count indictment should be tossed because prosecutors deceived Hwang into cooperating with their probe and because Hwang’s trading activity had been lawful.

Hwang said federal prosecutors, long before his arrest last April, had viewed him as the mastermind of a vast market manipulation scheme, and induced him during several interviews and meetings over six months to divulge his defense strategy. But the judge said prosecutorial misconduct could justify a dismissal only if it substantially influenced the grand jury’s decision to indict, or there was “grave doubt” that there was no such influence.

“There is no support in the record for such a finding,” Hellerstein wrote.

He had said during a Tuesday hearing that prosecutors were free to change their minds in the course of a probe.

Hellerstein also rejected a dismissal request by Hwang’s co-defendant, former Archegos chief financial officer Patrick Halligan.

Hwang’s attorney did not immediately respond to requests for comment.

Halligan’s lawyer, Mary Mulligan, said in an email that her client “had no role in the trades charged in the indictment.”

“We disagree with the government’s unfounded theories which will be rejected at trial,” she said.

Archegos collapsed in March 2021, causing billions of dollars in losses for banks such as Credit Suisse Group AG and Nomura Holdings Inc.

Hwang was accused of having borrowed aggressively and using total return swaps, a type of financial contract, to boost the effective size of Archegos’ market positions in stocks such as ViacomCBS and Discovery to more than $160 billion.

Authorities said Hwang concealed the size and riskiness of his bets by spreading his borrowing among several banks.

When the prices of some stocks fell, Hwang was unable to meet margin calls, leading banks to dump stocks backing his swaps, and causing losses for Archegos and others.

The case is U.S. v. Hwang et al, U.S. District Court, Southern District of New York, No. 22-cr-00240.

(Reporting by Jonathan Stempel in New York; Editing by Leslie Adler and Himani Sarkar)

By Heather Timmons and David Lawder

WASHINGTON (Reuters) -For the fourth time in a week, U.S. Treasury Secretary Janet Yellen took a microphone on Thursday aiming to reassure Americans that the U.S. banking system is safe, each time with a subtle shift in message.

But bankers and Wall Street never heard what they fervently wanted: That the government would guarantee all $19.2 trillion in U.S. bank deposits until the banking crisis that erupted two weeks ago calms down.

Yellen is the face of the U.S. government on the issue, and her public comments have sent markets on a roller coaster ride.

Becoming more explicit each time she has spoken, Yellen has repeatedly said the U.S. will safeguard deposits but has stopped short of a blanket guarantee, which would insure account balances of any size, including those above the current limit of $250,000.

Her comments on Thursday more clearly indicated than previously that further guarantees for uninsured deposits would come in the form of rescues for depositors of individual failing banks where problems threaten to spark runs on other banks.

She told U.S. lawmakers that bank regulators and the Treasury were prepared to make comprehensive deposit guarantees at other banks as they did at failed Silicon Valley Bank and Signature Bank.

“These are tools we could use again, for an institution of any size, if we judge that its failure would pose a contagion risk,” she told a U.S. House of Representatives Appropriations subcommittee hearing.

The comments helped lift broad stock indexes. But regional bank shares including those of struggling First Republic Bank continued to slide.

Yellen on Wednesday told a Senate subcommittee that she was not considering a move to circumvent Congress and grant “blanket insurance” on all U.S. bank deposits.

CONGRESS’ CLOUT

That’s a step that the government and regulators took unilaterally in the 2008 global financial crisis, but the Biden administration would now have to get approval from Congress under 2010 reforms.

Hardline Republicans oppose any increase in the current $250,000 Federal Deposit Insurance Corp limit, making it unlikely that Yellen could hastily arrange such a backstop even if the crisis worsens.

Banks and markets have found Yellen’s comments unsettling at times. On March 16, she told a told a Senate hearing that banks had to pose a systemic risk to win a deposit guarantee, a comment interpreted as leaving small community banks to fend for themselves.

But at a bank conference on Tuesday, she said that similar actions to the SVB guarantee “could be warranted if smaller institutions suffer deposit runs,” reassuring those institutions.

Yellen’s reluctance to endorse a universal backstop has drawn criticism from investors including hedge fund manager Bill Ackman. They argue that a universal guarantee is needed to prevent depositors at small and mid-size banks from fleeing for perceived safety at large banks viewed as “too big to fail.”

(Reporting by Heather Timmons and David Lawder; Writing by Heather Timmons; Editing by Paul Simao and Cynthia Osterman)

WASHINGTON (Reuters) -The Biden administration on Thursday added 14 Chinese companies to a red flag list, forcing U.S. exporters to conduct greater due diligence before shipping goods to them because U.S. officials have been unable to inspect the listed entities.

Being added to the list can potentially start a 60-day clock that could trigger much tougher penalties.

“Enforcing our export controls is a crucial part of protecting American national security,” U.S. Deputy Secretary of Commerce Don Graves said in a statement following the announcement. “We are committed to using all of the tools at our disposal to establish how advanced US technology is being used around the globe.”

ECOM International and HK P&W Industry Co Ltd were among those added to the list and did not respond to requests for comment. A spokesperson for the Chinese Embassy in Washington said “China strongly deplores and firmly opposes” moves by the United States to “abuse export control measures” and use “state power to suppress and contain foreign companies.”

“The U.S. side should immediately stop its wrong practices. China will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese companies,” the spokesperson added.

The United States has used restrictions on exports of U.S. goods as a key tool to thwart Beijing’s technological advances, ratcheting up tensions between the two countries.

The Commerce department, which oversees U.S. export controls, also added 18 other entities to the list from Turkey, the United Arab Emirates, Germany, Bulgaria, Canada, Indonesia, Israel, Malaysia, Saudi Arabia and Singapore.

(Reporting by Alexandra Alper and Karen Freifeld; Editing by Chizu Nomiyama, Jonathan Oatis and Jamie Freed)

(Reuters) -Australian aged-care provider Estia Health Ltd said on Friday it received a non-binding buyout proposal from U.S. private investment firm Bain Capital for A$775.1 million ($517.77 million), sending its shares to an over 3-year high.

The A$3.00 cash per share proposal, which is at a 28.2% premium to Estia’s last close, is among the latest proposals by a private equity firm since last year amid increasing merger and acquisition activity in Australia.

The board of Estia Health is considering the indicative proposal to assess whether it is in the best interests of shareholders to engage with Bain Capital, the company said in a statement.

Shares of the Sydney-based company surged as much as 21.4% to A$2.84, their highest since November 2019. It was also on track to post its biggest jump in more than two years.

Local media had reported on Thursday that a potential acquirer was buying shares in the company based on its volume over the past two days.

On Friday, Estia said it is not aware of the identity of the party or parties who have acquired shares over the preceding two days.

With reference to the local media report, brokerage RBC said it had a positive outlook for the aged care sector on improving occupancy rates, dissipating COVID impacts and smaller providers exiting the market.

Estia last month posted net loss from ordinary activities after tax attributable for six months ended Dec. 31 of A$25.3 million, compared to a loss of A$8.1 million a year prior.

In April last year, EML Payments was in talks with Bain Capital for a potential buyout, but the company said the talks had ceased without an agreed deal.

($1 = 1.4970 Australian dollars)

(Reporting by Ayushman Ojha; Editing by Rashmi Aich)

(Reuters) -Customers Bancorp Inc is exploring a deal for all or part of the failed Silicon Valley Bank, Bloomberg News reported on Thursday, citing people familiar with the matter.

The Pennsylvania-based lender has been seeking potential co-investors for a deal for Silicon Valley Bank, according to the report.

The Federal Deposit Insurance Corp (FDIC), which controls the Silicon Valley Bank’s assets, declined to confirm or comment on the identities of potential bidders when contacted by Reuters. Customers Bank did not immediately respond to request for a comment.

U.S. regional bank Citizens Financial Group Inc is working on a bid to acquire the private banking business of failed Silicon Valley Bank, two sources told Reuters earlier in the day.

The FDIC tried to sell SVB’s private banking business alongside Silicon Valley Bank over the last two weekends, however, it failed to clinch a deal to sell them both together.

It has since asked for separate offers for SVB Private and Silicon Valley Bank by March 24.

(Reporting by Nilutpal Timsina in Bengaluru; Editing by Rashmi Aich)

By David Lawder, Kanishka Singh and Sinéad Carew

(Reuters) -U.S. Treasury Secretary Janet Yellen sought to reassure jittery investors that American bank deposits were safe and promised policymakers had more firepower to battle any crisis even as bank stocks resumed their slide on Thursday.

Investors have dumped banking stocks globally over the past two weeks, with rapid interest rate hikes to rein in inflation blamed by some as the root cause of the debacle. U.S. bank stocks slid again on Thursday, pushing the S&P 500 banks index down to its lowest close since November 2020.

U.S. lender Silicon Valley Bank’s collapse over bond-related losses tied to a surge in interest rates was the initial trigger for the turmoil, and JPMorgan Chase & Co analysts estimate the “most vulnerable” U.S. banks likely lost a total of about $1 trillion in deposits since last year. Half of the outflows occurred in March after SVB’s collapse, they said.

Policymakers have stressed the turmoil is different from the financial crisis 15 years ago, and Yellen repeated that she was prepared to take more action to protect bank deposits if needed – one of the issues investors are concerned about.

“As I have said, we have used important tools to act quickly to prevent contagion. And they are tools we could use again,” Yellen said in prepared remarks to the U.S. House of Representatives Appropriations subcommittee hearing.

“The strong actions we have taken ensure that Americans’ deposits are safe. Certainly, we would be prepared to take additional actions if warranted.”

BOE HIKES AGAIN

In Europe, the Bank of England became the latest central bank to hike rates this week.

After its eleventh straight hike, the BoE said it had noted the “large and volatile moves” in financial markets, but that Britain’s banking system remained resilient.

“We have learnt a lot of lessons from the financial crisis. Of course, we keep learning lessons, but I’m confident that the banks in (Britain) are in a much stronger position,” BoE governor Andrew Bailey told broadcasters.

While some of the panic over the fate of banks has abated, investors are now adjusting to more challenging economic and lending conditions ahead.

The index of top European banks fell 2.5%, with German banking giants Deutsche Bank and Commerzbank falling 3.2% and 4.1%, respectively. London-headquartered HSBC dropped 2.9%.

U.S. banking shares initially rose on Thursday with traders citing the Fed’s hints that it could soon pause further increases in borrowing costs as a source of some relief, but later turned negative.

Troubled U.S. regional lender First Republic Bank, which is among banks speaking to peers and investment firms about potential deals, closed down 6%. About 90% of the bank’s stock market value has evaporated this month, leaving it with a market capitalization of just over $2 billion.

“Despite the strong efforts to protect, particularly First Republic, the crisis continues and investors are left wondering what is it that I’m not seeing,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

Other U.S. banks under the microscope after the demise of SVB and Signature Bank added to recent losses. PacWest Bancorp, Comerica and Zion Bancorp each tumbled more than 8%.    Truist Securities cut its price targets on regional banks including Zions and Comerica, warning of slower growth and higher credit costs.

The S&P 500 banks index, which closed down 1.2%, has now fallen over 40% from its record high in February 2022.

BANK BOND PRESSURE

Earlier on Thursday, the Swiss National Bank raised its benchmark interest rate by 50 basis points and said the takeover of Credit Suisse – the biggest name ensnared by recent turmoil – by its Swiss rival UBS had averted a financial disaster.

To stop investor panic from spreading, the Swiss bank was rushed into the deal on Sunday with UBS Group AG, which along with Swiss authorities is racing to close the takeover within as little as a month, according to two sources with knowledge of the plans.

Spokespeople for UBS and Credit Suisse declined to comment.

“At this moment the focus has to be that we can maintain financial stability and that the closing of the deal is smooth and fast,” SNB Chair Thomas Jordan told a news conference.

Separately, Credit Suisse and UBS are under scrutiny in a U.S. Department of Justice probe into whether financial professionals helped Russian oligarchs evade sanctions, Bloomberg News reported on Thursday.

The rescue of Credit Suisse has ignited broader concerns about investors’ exposure to a fragile banking sector. The decision to prioritise shareholders over Additional Tier 1 (AT1) bondholders rattled the $275 billion AT1 bond market and some Credit Suisse AT1 bondholders were seeking legal advice.

The convertible bonds were designed to be invoked during rescues to prevent the costs of bailouts falling onto taxpayers as it happened during the global financial crisis in 2008.

Politicians are also wary of public perceptions that banks are being bailed out again, after anger over the sector’s costly rescue in 2008. The U.S. Senate Banking Committee called on the former chief executives of SVB and Signature Bank to testify as lawmakers weigh possible action.

Citizens Financial Group Inc is working on a bid to acquire the private banking business of Silicon Valley Bank, two people familiar with the matter said. The FDIC, which now controls the Silicon Valley Bank assets, and Citizens Financial declined to comment.

($1 = 0.9280 Swiss franc)

(Reporting by David Milliken in London, John Revill in Zurich and Aniruddha Ghosh and Akanksha Khushi in Bengaluru, Noel Randewich in Oakland, California, David French, Saeed Azhar, Nupur Anand and Sinead Carew in New York; Writing by Toby Chopra and Deepa BabingtonEditing by Tomasz Janowski, Lisa Shumaker and Lincoln Feast.)

By Svea Herbst-Bayliss and Anirban Sen

NEW ORLEANS (Reuters) – Some of the most prominent rainmakers in the world of corporate mergers struck a note of optimism about dealmaking on Thursday, even as they acknowledged a volatile economic backdrop had significantly impacted M&A activity.

The banking crisis that has emerged in the wake of Silicon Valley Bank’s failure has shaken boardroom confidence already dented by fears over an economic slowdown, investment bankers and deal lawyers told the Tulane Corporate Law Institute conference in New Orleans.

“There is a brick wall in front of M&A activity,” said Anu Aiyengar, global head of M&A at JPMorgan Chase & Co.

“When you look at what’s happening in China, geopolitical tensions, interests rates, bank runs, liquidity crisis, increased chances of recession – throw everything together and it seems quite formidable.”

With financing having dried up for private equity-backed leveraged buyouts, buyers will have no option but to put up a lot of equity to get deals done in the near term, the conference participants said.

“We are in for choppiness,” said Scott Barshay, chair of the corporate department at law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP. “There is a giant struggle right now. And it’s a giant struggle because there’s a lot of dry powder for the equity part of private equity deals. What there’s not is a lot of leverage for the leverage part of the leveraged buyout.”

M&A volumes declined considerably last year amid fears of faster interest rate hikes, possible recession, weaker credit markets and a tumbling stock market.

The total value of deals last year fell 37% from a record high in 2021 to $3.61 trillion, according to Refinitiv data. That is the biggest year-over-year percentage drop since 2001 when the U.S. economy fell into recession.

Global dealmaking this year through mid-March has tumbled nearly 50% in terms of dollar volumes from a year ago and is off nearly 30% in terms of the number of deals being done, according to Refinitiv.

Dealmakers, however, said they expect the impact from the banking crisis on broader M&A activity to be contained, as most of the worst affected regional banks are not major advisers or lenders on deals.

The technology sector remains the best hunting ground for corporate acquirers or private equity financiers, deal advisors said.

“There is really no part of the world that allows you to have an organic growth trajectory that lets you meet the market possible for trading at a premium valuation, which means you have to look at inorganic growth opportunities,” said Aiyengar.

Dealmakers also predicted an increase in unsolicited approaches from cash-flush buyers who are taking advantage of a drop in valuations of potential targets, who are now more willing to entertain bids than they were a few months ago.

Increased regulatory uncertainty due to greater scrutiny on deals from antitrust regulators also is likely to impede the speed of deals getting across the finish line, with dealmakers criticizing the adversarial stance taken by the Federal Trade Commission and the Department of Justice.

“In this very narrow context of who’s going to be running the DOJ antitrust division and the FTC in the future, our business will be a lot better if it’s somebody else,” said Barshay.

(Reporting by Svea Herbst-Bayliss and Anirban Sen in New Orleans; Editing by Lincoln Feast.)