(Reuters) -Wall Street CEOs and U.S. officials discussing an intervention at First Republic Bank are exploring the possibility of government backing to encourage a deal, Bloomberg News reported on Tuesday, citing people with knowledge of the situation.

Among options, the government could play a role in lifting assets out of First Republic that have eroded its balance sheet, according to the report.

Additional ideas have included offering liability protection, applying capital rules more flexibly or easing limits on ownership stakes, Bloomberg News reported.

First Republic, whose shares were down nearly 18% in aftermarket trading, declined to comment.

(Reporting by Niket Nishant in Bengaluru; Editing by Devika Syamnath and Shounak Dasgupta)

By Stephen Culp

NEW YORK (Reuters) – Wall Street closed sharply higher on Tuesday as widespread fears over liquidity in the banking sector abated and market participants eyed the Federal Reserve, which is expected to conclude its two-day policy meeting on Wednesday with a 25 basis-point hike to its policy rate.

All three major U.S. stock indexes were bright green as the session closed, with energy consumer discretionary and financials enjoying the most sizable gains.

A one-two punch of regional bank failures last week, followed by the rescue of First Republic Bank and the takeover of Credit Suisse, sparked a rout in banking stocks and fueled worries of contagion in the financial sector which, in turn, heightened global anxieties over the growing possibility of recession.

But banking stocks bounced back on Tuesday, building on Monday’s reversal. Still, despite its recent resurgence, the S&P Banks index has lost more than 18% of its value just this month.

Both the SPXBK and the KBW Regional Banking index jumped 3.6% and 4.8%, respectively, their biggest one-day percentage jumps since late last year.

“The stock market is coming to a recognition that the banking crisis wasn’t a crisis after all, and was isolated to a handful of banks,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. “Both the public and the private sector have shown they are more than able to backstop and shore up weak institutions.”

Treasury Secretary Janet Yellen, in prepared remarks before the American Bankers Association, said the U.S. banking system has stabilized due to decisive actions from regulators, but warned more action might be required.

Attention now shifts to the Fed, which has gathered for its two-day monetary policy meeting, at which the members of the Federal Open Markets Committee (FOMC) will revisit their economic projections and, in all likelihood, implement another increase to the Fed funds target rate in their ongoing battle against inflation.

“The Fed will raise interest rates by 25 basis points and the market won’t care,” Pursche added. “It will all be about (Chairman Jerome) Powell’s statement on the economy and inflation, and if he can do a good enough job convincing the public that the banking noise” can be attributed to bad management on the part of a few banks.

At last glance, financial markets have now priced in an 83.4% likelihood of a 25 basis-point rate hike, and a 16.6% probability that the central bank will leave its policy rate unchanged, according to CME’s FedWatch tool.

Economic data released early in the session showed a 14.5% jump in existing home sales, blasting past expectations and snapping a 12-month losing streak.

The Dow Jones Industrial Average rose 316.02 points, or 0.98%, to 32,560.6, the S&P 500 gained 51.3 points, or 1.30%, to 4,002.87 and the Nasdaq Composite added 184.57 points, or 1.58%, to 11,860.11.

Eight of the 11 major sectors in the S&P 500 ended the session in positive territory, with energy stocks, boosted by rising crude prices, posting the largest percentage gains.

Shares of First Republic Bank soared by 29.5%, the company’s biggest-ever one-day percentage jump as JPMorgan CEO Jamie Dimon leads talks with other big banks aimed at investing in the lender, according to the Wall Street Journal.

Peers PacWest Bancorp and Western Alliance Bancorp also surged, leaping 18.8% and 15.0%, respectively.

Tesla Inc advanced 7.8% after the electric automaker appeared on track to report one of its best quarters in China, according to car registration data.

Advancing issues outnumbered declining ones on the NYSE by a 3.22-to-1 ratio; on Nasdaq, a 2.73-to-1 ratio favored advancers.

The S&P 500 posted 5 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 48 new highs and 114 new lows.

Volume on U.S. exchanges was 11.75 billion shares, compared with the 12.63 billion average over the last 20 trading days.

(Reporting by Stephen Culp in New York; Additional reporting by Shubham Batra, Amruta Khandekar and Ankika Biswas in Bengaluru; Editing by Matthew Lewis)

By Aida Pelaez-Fernandez

MEXICO CITY(Reuters) – With Tesla Inc’s plan to open a $5 billion Gigafactory in Mexico, the country should soon become a hub of electric vehicle (EV) production, but the zero emissions cars remain too expensive for most Mexicans and they are impractical to drive in much of the country, which lacks enough charging stations.

Mexico has made reviving fossil fuel output a priority under President Andres Manuel Lopez Obrador, frequently giving short shrift to investment in renewable power sources.

    But it also has lofty ambitions to boost EV ownership as Tesla gears up to develop its factory in the northern border state of Nuevo Leon. General Motors Co, Ford Motor Co, BMW and Volkswagen’s Audi unit also are producing EVs in Mexico, or plan to. And Mexico also has at least one home-grown EV-maker, the unlisted Zacua.

    Foreign Minister Marcelo Ebrard, a leading contender to be Mexico’s next president, said the government wants EVs to account for half of all cars sold domestically by 2030. Officials said that goal includes all zero emission vehicles, including hybrid and hydrogen-powered autos. Even so, it will take a lot of work to get there.

    EVs made up just 0.5% of domestic auto sales last year, according to Mexico’s Auto Industry Association AMIA, far below the U.S. percentage of 5.8%, according to research firm Motor Intelligence. If hybrids are added, Mexico reaches 4.7%.

    “There are still a number of issues that need resolving in Mexico before there’s a massive influx of electric cars,” said Mario Hernandez, KPMG’s lead manufacturing partner in Mexico.

Hernandez said drawbacks included a lack of subsidies for buyers, high costs for installing charging devices at homes and a shortage of public charging stations, vital for longer journeys. Unlike other countries, Mexico has not yet agreed on a plan to phase out gasoline-powered vehicles, he added.

    Nearly 1.1 million new cars in total were sold in Mexico last year. Just 5,600 of those were EVs, much less than the 8,400 sold in Latin America’s biggest car market, Brazil.

    Yet output of EVs in Mexico was seen surging to 142,000 cars this year from 78,000 in 2022, Mexico’s auto parts industry group INA estimated before Tesla announced its new plant.

    AMIA Executive President Jose Zozaya told Reuters there were still “too few incentives from government” to boost EV sales.

    “I have my reservations that we can reach authorities’ expectations by 2030,” said Nazareth Black, Chief Executive of EV-maker Zacua. “A real government incentive scheme would be necessary to really accelerate adoption of electric vehicles.”

    RANGE ANXIETY

    Elsewhere in Latin America, countries from Costa Rica to Chile have included EV targets to reduce emissions as part of their commitments under the 2015 Paris climate accords. So far Mexico has shied away from such pledges.

    The country needs more charging stations to make EVs practical. Mexico has about 1,100 charging stations nationwide, mostly in the capital and other major cities, according to AMIA. New York state alone has 9,000, according to the governor.

    Pedro Corral, director of operations for EV charging stations platform Evergo, drives his all-electric i3 BMW around Mexico City. But when he leaves the city, he generally switches to a fuel-powered Toyota lest he run out of charge.

    Evergo aims to install 4,000 chargers for public use in the next four years, betting on growing appetite for EVs.

    Still, Corral said current sales suggest Mexico’s targets are unrealistic, and was unsure the publicity surrounding Tesla’s new factory would boost sales much.

    Tesla’s cheapest model, costing some $55,000, plus the expense of a charger, means most Mexicans cannot afford an EV. Cheaper models like the Nissan Leaf go for more than $50,000 and even the two seater Zacua costs around 600,000 pesos ($31,767).

    The typical Mexican worker makes $366 a month on average, according to official data. The statutory minimum wage guarantees a Mexican around $11 per day.

    And while Tesla’s superchargers are ubiquitous in populous U.S. regions, they are sparse in Mexico. Many states have none.

    “There are great benefits of having an electric car,” said Corral, “but they are costly and people worry about the range.”

($1 = 18.8870 Mexican pesos)

(This story has been refiled to say KPMG, not KMPG, in paragraph 6)

(Reporting by Aida Pelaez-Fernandez; additional reporting by Daina Beth Solomon and Diego Ore; Editing by Dave Graham and David Gregorio)

(Reuters) – Wall Street’s top regulator said on Tuesday it had postponed a planned vote on a proposed rule to help protect the stability of the financial system by detecting risk in the $20 trillion private asset management sector.

The U.S. Securities and Exchange Commission last week announced that it would hold a vote on March 22 on whether to adopt a proposal issued last year to require large, private money managers to alert the agency to signs of stress or mounting risk in the assets they handle.

However, an SEC spokesperson said on Tuesday that officials had decided the text of the proposal wasn’t quite ready for adoption and so had removed it from the scheduled public meeting’s agenda.

“It’s been a busy few weeks, and the Commission decided to take a little more time with the Form PF adoption release,” the spokesperson said.

The volume of assets under private management has more than doubled in the decade since the SEC began collecting such data, prompting fears that financial risk could build up undetected. The financial system shuddered last week with the near-collapse of the Swiss lender Credit Suisse, a bank that in 2021 lost billions that had been held by the now-defunct family office Archegos Capital Management.

The SEC on Wednesday is still due to consider another proposal concerning the electronic filing of certain forms and data and public disclosures by stock exchanges and broker-dealers.

(Reporting by Douglas Gillison; editing by Jonathan Oatis)

By Pete Schroeder and Andrea Shalal

WASHINGTON (Reuters) – Government officials discussed the idea of increasing deposit insurance without obtaining approval from Congress as they brainstormed various approaches to solving the turmoil in banking, two sources familiar with the talks said on Tuesday.

The idea, potentially to use the Treasury Department’s Exchange Stabilization Fund, was first floated by government officials in the flurry of conversations between the Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation in the days after Silicon Valley Bank failed on March 10, according to one government source.

The idea was not universally supported, the source said.

A second source familiar with the discussions said the idea was discussed but emphasized that while a temporary solution without congressional approval had been discussed, any permanent action would require congressional approval. That source said that they did not think such a measure was necessary.

A third source said the administration “does not view the move as necessary because it has tools to support community banks.”

News of the talks was previously reported by Bloomberg.

In the immediate fallout of SVB’s failure, banks also explored the use of the Exchange Stabilization Fund to backstop a broader deposit guarantee, according to one industry lawyer, as the industry also explored what options could be available. One concern raised is that the fund, which is an emergency reserve last tapped during the 2020 pandemic, only had $38 billion of readily available funds as of Jan. 31.

Under current law, U.S. regulators are supposed to go to Congress when they determine a “liquidity event” requires an increase in the amount the government will guarantee.

The restriction was put in place among several other curbs on regulator power following the 2008 financial crisis and ensuing bank bailouts.

Among the concerns raised about using the Treasury fund instead would be the expected criticism from Congress, and potential concerns over its legality, according to the government source.

“I think that’s a hard argument, you look at the language … it says the FDIC should provide guarantees in times of stress, but that it requires approval under this streamlined process,” said Sheila Bair, who chaired the FDIC during the 2008 crisis. “I think it’s questionable.”

Spokespeople for the Fed, and FDIC declined to comment.

The Treasury declined to comment on any discussions, but a spokesperson said, “Due to decisive recent actions, the situation has stabilized, deposit flows are improving and Americans can have confidence in the safety of their deposits.”

White House spokesperson Michael Kikukawa said the Biden administration would use the tools it has to support community banks, noting deposits had stabilized at regional banks throughout the country and, in some cases, outflows had modestly reversed, since the measures taken in early March.

On Tuesday, Deputy Treasury Secretary Wally Adeyemo said “decisive action” taken by the Treasury, Fed and FDIC to protect depositors and ensure liquidity had stabilized the banking system, but a review of the banks’ failures was in order.

    “It’s … important that we review the failures of the two banks in question to ensure we have a set of rules and procedures for the banking system that continues to protect our economy and depositors across the country,” Adeyemo said at an event hosted by the U.S. Hispanic Chamber of Commerce.

    “We of course continue to monitor the current situation and consider what steps can be taken to further strengthen America’s financial stability,” he said, without elaborating.

(Reporting by Pete Schroder and Andrea Shalal; Editing by Megan Davies and Daniel Wallis)

By Dietrich Knauth and Tom Hals

(Reuters) -SVB Financial Group and the federal regulator that closed its Silicon Valley Bank unit indicated at a bankruptcy court hearing on Tuesday that a fight is looming over $2 billion of the former parent company’s cash that was seized along with the lender.

SVB Financial, which filed for bankruptcy on Friday, had said in court papers the U.S. Federal Deposit Insurance Corporation took “improper actions” to cut off the parent company from its cash held at its former subsidiary, which was seized by regulators to stem a national bank run.

SVB Financial’s attorney told U.S. Bankruptcy Judge Martin Glenn at a hearing in Manhattan that the financial company lost access to its deposits the day before it filed for Chapter 11 protection.

“Not only has the bank been taken, all the cash has been taken,” said James Bromley, an attorney for SVB Financial.

California banking regulators on March 10 closed Silicon Valley Bank in the largest U.S. bank failure since the 2008 financial crisis.

The collapse of the Santa Clara, California-based bank and Signature Bank, another U.S. midsized lender, prompted a rout in banking stocks as investors worried about other ticking bombs in the banking system and led to UBS Group AG’s takeover of 167-year-old Credit Suisse Group AG to avert a wider crisis.  

Kurt Gwynne, an attorney for the FDIC as receiver for Silicon Valley Bank, disputed at Tuesday’s hearing that regulators had done anything improper. He also said there may be fights over the money SBF Financial had on deposit at the bank.

“There was nothing wrong with freezing accounts and trying to protect deposits” before the bankruptcy filing, Gwynne said.

Marshall Huebner, an attorney representing creditors who hold more than half of SVB Financial’s bond debt, said in court that the FDIC should not be allowed hold the parent company’s deposits indefinitely while creditors are owed $3.4 billion.

Gwynne said that the FDIC and other regulators took steps to insure all bank deposits as a way of preventing a banking panic and without those steps, there would be nothing of value at SVB Financial to fight over.

He also said that SVB Financial was not just a depositor, but also a shareholder of the bank and shareholders were not being protected by regulators.

Glenn said he did not believe at this time that the FDIC acted improperly.

Bromley said there were bidders for SVB Financial’s businesses, which include venture capital and investment banking units. Those units were excluded from the FDIC takeover.

While SVB Financial lost access to around $2 billion, it still has access to over $180 million in accounts at other banks. Glenn said he was prepared to allow SVB Financial to use up to $100 million for investment activity.

The FDIC has said in court filings that it is holding SVB Financial’s funds while investigating potential claims against it.

SVB Financial and two top executives were sued last week by shareholders who accused them of concealing how rising interest rates would leave the Silicon Valley Bank unit “particularly susceptible” to a bank run.

SVB Financial has $3.4 billion in debt and it manages about $9.5 billion of other investors’ money across its portfolio of venture capital and credit funds, according to court filings.

Silicon Valley Bank was SVB Financial’s largest asset, accounting for more than $15.5 billion of SVB Financial’s $19.7 billion in total assets.

(Reporting by Dietrich Knauth in New York and Tom Hals in Wilmington, Delaware, Editing by Alexia Garamfalvi and Matthew Lewis)

By Akash Sriram

(Reuters) -GameStop Corp on Tuesday posted a surprise profit for the fourth quarter, its first since early 2021, as lower costs and job cuts padded the videogame retailer’s bottom line, sending its shares nearly 50% higher in extended trading.

The company has also been shoring up its online sales capabilities in a bid to beef up its digital presence and diversify from the current mainstay of brick-and-mortar stores as competition heats up from bigger retailers.

“We’re aggressively focused on year-over-year profitability improvement while still pursuing pragmatic long-term growth,” CEO Matt Furlong said in a post-earnings conference call.

GameStop’s selling, general and administrative costs fell by about 16% in the quarter.

“It’s unlikely that they can grow by spending less. I expect them to return to losses again next quarter, and think this is a one-off result,” said Wedbush Securities analyst Michael Pachter.

The retailer posted an adjusted profit of 16 cents per share, compared with Wall Street expectations for a loss of 13 cents.

Just three analysts had provided estimates for the quarter, however, as several stopped covering GameStop after traders on Reddit’s wallstreetbets forum drove a massive surge in the stock across 2020 and 2021 with no fundamentals driving the rally.

The so-called “meme stock”, which is the top trending ticker on retail trader forum Stocktwits, has declined 4% this year.

Wedbush’s Pachter also said the rise in gross margin to 22.5% from 16.8% was well below historical levels of 24% to 29%.

GameStop lowered its inventory to $682.9 million at quarter-end from $915 million a year earlier, with sales of software and collectibles accounting for about 47% of revenue in fiscal 2022.

Net profit for the quarter ended Jan. 29 was $48.2 million, compared with a loss of $147.50 million a year earlier.

Revenue of $2.23 billion was above analysts’ average estimates of $2.18 billion, according to Refinitiv.

(Reporting by Akash Sriram in Bengaluru; Editing by Devika Syamnath)

By Jody Godoy and Jonathan Stempel

NEW YORK (Reuters) – A U.S. judge on Tuesday signaled he was unlikely to dismiss an indictment accusing Bill Hwang of fraud in the collapse of his $36 billion Archegos Capital Management LP, after Hwang accused prosecutors of misconduct for duping him into cooperating with their probe. U.S. District Judge Alvin Hellerstein heard arguments in Manhattan federal court on whether to continue the criminal case over Archegos’ March 2021 collapse, which saddled banks including as Credit Suisse Group AG and Nomura Holdings Inc with multibillion-dollar losses. Hwang said the U.S. Department of Justice concealed how it viewed him long before his arrest as the mastermind of a vast market manipulation scheme, and prosecutors induced him during two six-hour interviews and other meetings over six months to divulge his defense strategy. He also said the indictment should be dismissed because Archegos’ trading had been lawful, and he should not be criminally punished solely because it backfired.

Prosecutors have said they worked in good faith to determine why Archegos collapsed, and treated Hwang fairly. At Tuesday’s hearing, Hellerstein said prosecutors were entitled to change their minds about their investigation.

He also said more facts were required before drawing a line between lawful and unlawful trading in the case.Archegos’ collapse occurred in March 2021 after Hwang borrowed aggressively to boost the effective size of the firm’s market positions in stocks such as ViacomCBS and Discovery to more than $160 billion, according to prosecutors.Authorities said Hwang spread his borrowing among several banks, enabling him to conceal the true size of bets he made through so-called total return swaps, and the risk of doing business with Archegos.When the prices of some of the stocks fell, Hwang was unable to meet margin calls, leading banks to dump stocks backing the swaps, and causing losses for Archegos and others. Credit Suisse lost more than $5 billion in the debacle. The case is U.S. v. Hwang et al, U.S. District Court, Southern District of New York, No. 22-cr-00240.

(Reporting by Jody Godoy and Jonathan Stempel in New York; Editing by David Gregorio)

(Reuters) -Royal Bank of Canada on Tuesday asked its employees to return to office three or four days a week, as Canada’s largest lender eases its COVID-19 protocols.

In an internal memo to employees seen by Reuters, RBC said that “starting May 1, employees in hybrid work arrangements will come together in person for the majority of the time. This means you have the option to work remotely for one to two days each week, depending on your team”.

The bank said its senior leaders will finalise plans and provide updates to individual teams.

An RBC spokesperson confirmed the details of the memo.

Nearly three years after the onset of the pandemic, companies across the globe have ramped up efforts to bring more employees back to offices.

RBC Chief Executive Officer Dave McKay last year asked its employees to return to office more often, but said the hybrid work approach was “here to stay”.

National Bank of Canada said it has an average objective of 40% of the time in office for its employees, while Canadian Imperial Bank of Commerce said time spent at the office depends on the role.

(Reporting by Jaiveer Singh Shekhawat in Bengaluru; Additional Reporting by Niket Nishant; Editing by Maju Samuel, Devika Syamnath and Shounak Dasgupta)

By Lisa Pauline Mattackal and Medha Singh

(Reuters) – As crisis stalks the traditional world of stocks and bonds, bitcoin is suddenly looking like a safe haven.

The infamously volatile cryptocurrency seems positively hale and hearty, just as a banking meltdown drives markets into the arms of a recession.

    Bitcoin has risen 21% this month, while a choppy S&P 500 has lost 1.4% and gold has gained 8%.

“If you were going to describe an environment where there were successive bank runs because central banks are trying to fight inflation with fast rate increases, that is pretty close to as spot-on a thesis for owning bitcoin as you’ve ever heard,” said Stéphane Ouellette, CEO at digital asset investment platform FRNT Financial.

The cryptocurrency has, for now, severed its ties with stocks and bonds and tagged on to a rally in gold, fulfilling at least one part of creator Satoshi Nakamoto’s dream – that bitcoin can serve as a refuge for suffering investors.

Bitcoin’s 30-day correlation with the S&P 500 has slid to negative 0.12 over the past week, where a measure of 1 indicates the two assets are moving in lock step. 

A selloff in banks has wiped out hundreds of billions of dollars in market value and forced U.S. regulators to launch emergency measures. The past couple of weeks has seen Silicon Valley Bank and crypto lender Silvergate go under, while Credit Suisse has teetered on the brink.

Graphic: Bitcoin refuge amid chaos https://www.reuters.com/graphics/FINTECH-CRYPTO/WEEKLY/egvbyjaakpq/chart.png

‘RETURN TO CORE ETHOS’

Let’s not carried away, though. This is bitcoin.

“The bearish argument would be that these dynamics are temporary, and ultimately this rally is not going to sustain,” said Ouellette.

It remains to be seen if bitcoin’s bullishness will endure as attention shifts to the Federal Reserve’s policy meeting this week where the U.S. central bank must walk a fine line as it fights inflation and bank stresses.

Furthermore, the cryptocurrency’s allure hasn’t all been about safety.

The rapid price rise has forced some short-sellers to cut their bets and buy coin back. Data from Coinglass shows traders liquidated $300 million worth of crypto positions on Monday, with most of that total – $178.5 million – short positions.

Nonetheless, bitcoin is resurgent.

It now commands nearly 43% of the total crypto market, its highest share since last June, according to CoinMarketCap data, while the total cryptocurrency market’s capitalization has jumped 23% to $1.1 billion since March 10.

“We’re seeing a return to bitcoin’s core ethos, that of a financial asset independent from the opacity and meddling of the centralized financial system,” said Henry Elder, head of decentralized finance (DeFi) at digital asset investment manager Wave Digital Assets.

The mainstream bank crisis has also fueled some interest in DeFi, with the total value of tokens linked to such platforms rising to $49 billion from $43 billion over the past week, according to DappRadar. 

BITCOIN IN A BANK CRISIS

Not all areas of the digital world have been immune to the banking fallout, though. The no. 2 stablecoin Circle USD or USDC lost its 1:1 peg to the dollar after disclosing its reserves were parked at the shuttered Silicon Valley Bank.

As worries spread over USDC’s ability to maintain its peg, its market cap slid to $36.8 billion last Friday from $43.8 billion a week earlier, even as leading stablecoin Tether gained around $4 billion.

Market participants said some USDC withdrawals were likely reinvested in bitcoin as well, helping fuel the rally.

“It’s too soon to say that bitcoin has proven the narrative that it’s an alternative in a banking crisis,” cautioned Ed Hindi, Chief Investment Officer at Tyr Capital in Geneva.

But he added: “The rally we are currently witnessing in bitcoin will be looked back at as the point in time where its main property as a decentralized non-sovereign asset was stress tested.”

(Reporting by Medha Singh and Lisa Mattackal in Bengaluru; Editing by Vidya Ranganathan and Pravin Char)