Credit Suisse and First Republic had withdrawals of BRL 850 billion – 04/25/2023 – Market

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Skeletons left by the crisis

The Swiss Credit Suisse and the American First Republic, banks that were saved from bankruptcy thanks to the efforts of governments and their private peers to avoid a systemic crisis, presented this Monday (24) the gap generated by the rush of customer withdrawals.

• while about BRL 345 billion (61.2 billion Swiss francs) were withdrawn from Credit in the first quarter of the year, withdrawals from First Republic were close to BRL 505 billion (US$ 100 billion) in the period.

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In numbers: Credit Suisse saw the value of its assets under management fall to CHF 502.5 billion (BRL 2.85 trillion) at the end of March, an amount almost 29% lower than that recorded in the same period last year.

In the First Republic, the level of deposits fell by more than 40%from US$ 176.4 billion at the end of the year to $104.5 billion at the end of the last quarter.

• Considering the contribution of US$ 30 billion from other banks, withdrawals reached US$ 100 billion in the period.

• In reaction to the release of the result, the bank’s shares, which have accumulated a drop of 90% in the year, plummeted more 20% in the aftermarket.

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Gold resumes protagonism

Gold, which was the main global reserve of value until it lost its sovereignty to the dollar, has regained prominence in a scenario of high inflation and sanctions related to the Ukraine War.

• Demand is such that today its price operates close to historic highs and close to the level reached at the beginning of the pandemic, when uncertainty took investors.

in numbers: the amount of gold bought by central banks increased by 152% in 2022, to 1,136 tons, according to an organization in the sector.

• In another survey, involving 83 BCs that manage $7 trillion in currency assets, more than two-thirds of respondents believed their peers would increase their reserves of the valuable mineral by 2023.

Which explains: most reserve managers say geopolitical risk is one of their most important concerns, second only to high inflation.

• When we take a closer look at last year’s gold buyers, we see that many of them are central banks in countries that are not fully aligned with the West, such as China, Turkey and countries in the Middle East and Central Asia.

• This can be explained because the gold reserves held by Russia, since they were stored in its territory, passed unscathed from Western sanctions imposed after the country’s invasion of Ukraine.

Will the dollar lose protagonism? The greater demand for gold comes amid discussions about the loss of part of the relevance of the two main global currencies, the dollar and the euro.

• Christine Lagarde, president of the European Central Bank, said last week that the disagreements between the US and China threatened those currencies.

• At the end of last year, however, the Chinese yuan accounted for only 2.7% of central banks’ reserves, while the dollar was at the forefront with 58% and the euro followed, with just over 20%.

Opinion: Ruchir Sharma, president of Rockefeller International, explains what rising gold has to say about falling dollar.

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Faria Lima wears boots and wears a hat

Before focusing mainly on the Rio-São Paulo axis, investment managers are increasingly looking to the Midwest, a region that is home to large producers that have benefited from the commodity boom in recent decades.

Which explains: the region is home to 16 of the 20 richest municipalities in Brazilian agribusiness. Its growth has been outstanding since the 1980s and accelerated in recent years, when the price of raw materials climbed, as well as the dollar exchange rate.

• From 1986 to 2023, Mato Grosso’s GDPs (695%), Mato Grosso do Sul (273%), Goiás (188%) and the Federal District (170%) grew well above the Brazilian economy, which had an accumulated increase of 108.7% in the period.

How Faria Lima connects to agriculture in the Midwest:

• Asset management: Banks and brokerages allocate more and more advisors to go after clients in the region, including those with from BRL 300,000 invested to multimillionaires, who in this case also rely on services such as succession planning.

• Financial products: Debt securities, such as the CRAs (Agribusiness Receivables Certificate), attract more and more investors, as well as the Fiagros, a kind of real estate fund for the agribusiness, which add up to around 240,000 investors and BRL 7.6 billion in invested volume, according to March data from B3.

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Hurb CEO steps down after offending customers

The CEO of Hurb (former Hotel Urbano), João Ricardo Mendes, resigned this Monday (24).

• “It’s risky for someone to knock on your fucking house,” he told a customer who did not have airline tickets issued by Hurb – the video was saved by users before being deleted from the CEO’s networks.

In the resignation letter, the executive admitted mistakes and tried to disassociate his attitudes from the company’s image. “These recent events, in fact, were the mistakes of ‘João Ricardo Mendes’ and not of an entire company that is much bigger than me.”

The Hurb Crisis: the company faces a barrage of criticism and complaints due to reports of defaults in hotels and inns, which end up canceling reservations, jeopardizing the travel of thousands of people.

• The customer who was threatened by Mendes, for example, said he was in a WhatsApp group with more than 1,000 people who did not have airline tickets issued by Hurb.

The startup model does not work with exact dates, but periods in which the trip can be made – the company, however, may end up issuing tickets on other dates.

• She sold a series of travel packages in the pandemic, but since the end of the health crisis, prices have soared, especially for airline tickets, and reports of package delays have become more frequent.

• In recent interviews, the CEO had stated that the current situation was caused by a blockade by banks on their receivables (money that the company has to receive for installment sales).

Mendes will be temporarily replaced by Otávio Brissant, the company’s current general council. The now former CEO stated that he remains the legal representative and main shareholder of the company.