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, would focus on issues exposed by the demise of Silicon Valley Bank after promising last month to examine if more rules were needed.

That could mean forcing medium-sized lenders such as SVB and now-defunct Signature Bank to comply with Basel rules on capital and liquidity, which in the US currently only apply to “internationally active” banks — 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is also exploring a major overhaul of its deposit guarantee scheme after SVB’s collapse led to billions of pounds being withdrawn overnight from the failed lender’s UK arm.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:

• Sweden: The Nordic country has its spring mini-budget, which is expected to include a rise in defence spending as it prepares to join Nato.

• UK parliament: The House of Commons returns from Easter break with questions to education secretary Gillian Keegan and a second reading of proposed data laws on the agenda.

Finally, 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. EXCLUSIVE: An investor in Enel has challenged board changes proposed by Italy’s government as part of shake-ups at state-controlled companies. London-based hedge fund Covalis Capital has presented its own alternative list of board candidates and criticised the current “toxic” process for management appointment.

2. EXCLUSIVE: Ikea has severed ties with a labour provider in Malaysia after an internal investigation found that several security guards at its stores in the country had paid fees to get jobs. Some workers from Nepal paid as much as $1,000 to obtain employment.

3. China is starting to target western interests in the country after five years of snowballing trade and technology restrictions spearheaded by the US. In the past two months, Beijing has initiated sanctions, raids and fines on western companies. Read more on what a former senior US official has called China’s “surgical” retaliation.

4. More than 50 civilians have died in Sudan and hundreds more were injured after intense fighting between the army and a rival paramilitary group continued yesterday, prompting international calls for a halt to hostilities between the country’s military president and his deputy. Read more on the power struggle that some fear could descend into a civil war.

5. Turkey is set to make its first delivery from a large natural gas discovery in the Black Sea this Thursday roughly three years after making the find and ahead of tightly contested elections next month. Here’s what the milestone means for President Recep Tayyip Erdoğan in the polls.

The Big Read

After the 2008 financial crisis, the UK’s Conservative party saw a chance to break the so-called super-regulator, the Financial Services Authority, into two. But in the 10 years since the “twin peaks” regime launched, both successor agencies have faced accusations that their risk aversion is hobbling the City’s efforts to carve out a post-Brexit future.

We’re also reading . . . 

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

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 Annie Jonas