FirstFT: First Republic aftershocks | Financial Times

Today we start in the US, where one of the biggest global gatherings of business leaders provided the perfect setting for attendees to reckon with the second-biggest bank failure in the country’s history.

Top investors and financiers descended on Beverly Hills yesterday for the annual Milken Institute conference, just as the rapid sale of First Republic to JPMorgan Chase was being announced. They warned that the third seizure of a bank by US regulators since March threatened to constrain credit and worsen an economic slowdown.

The failure of the ailing California bank did not spark the same degree of market mayhem as the earlier collapse of Silicon Valley Bank and Signature Bank, prompting relative relief among financial executives and Biden administration officials.

But several prominent investors used the conference’s opening day to predict aftershocks following the recent turmoil. They argued banks would be forced to comply with tougher rules that could crimp their ability to lend just as the US economy was starting to feel the full force of the Federal Reserve’s aggressive interest rate rises.

Here are my recommendations for further reading on First Republic and the aftermath of American bank failures:

And here is what else I am keeping tabs on today:

• UK strikes: Health unions in England vote on the government’s pay offer as widespread industrial action continues across Britain.

• Economic data: S&P Global releases its manufacturing purchasing manager’s indices for the UK, the EU, France, Germany, Italy and Spain.

• Results: Advanced Micro Devices, BP, Ford Motor Company, HSBC, Marriott International, Pfizer, Starbucks, Thomson Reuters, T Rowe Price and Uber report.

Five more top stories

1. Morgan Stanley is making plans to axe another 3,000 jobs or roughly 5 per cent of staff by the end of June, said people familiar with the discussions, who added the cuts would exclude customer-facing financial advisers in the bank’s prized wealth management unit. Here are the divisions expected to be hit.

2. Exclusive: Jeb Bush’s private equity firm held talks with the owners of Israeli spyware company NSO Group over a deal that would have seen the former Florida governor sell its products, including Pegasus spyware, which infiltrates phones surreptitiously, in the US. Read the full story.

3. The US government could run out of money as soon as June 1 if Congress does not raise or suspend the debt limit before then, Treasury secretary Janet Yellen warned yesterday. Read more from her letter to congressional leaders.

4. More than 20,000 Russian forces have been killed since December in the fight for Bakhmut, the White House said. National Security Council spokesperson John Kirby said Russia’s losses fighting for the Ukrainian town exceeded US fatalities at the Battle of the Bulge in the second world war.

5. Deloitte and PwC are giving extra coaching to young UK staff whose education was disrupted by Covid-19 lockdowns after noticing they had weaker teamwork and communication skills. Partners said the recruits had less confidence doing basic tasks such as making presentations and speaking up in meetings.

The Big Read

The German-Polish relationship is particularly crucial as western powers try to display unity against Vladimir Putin. But in Berlin, there is deep disillusionment with the Polish government led by the conservative Law and Justice party and what is seen as its attempt to use Germany as a political punch bag ahead of Polish parliamentary elections in the autumn.

We’re also reading . . . 

Chart of the day

Chinese initial public offerings have raised more than five times as much money as those in the US this year as a crop of new listings in the world’s biggest economy failed to appear after a dire 2022.

Take a break from the news

The UK’s potteries have produced ceramics to celebrate monarchy for about 300 years. This coronation year, the industry is hoping for yet another burst of royal mania. But is Charles III commemorative china in demand?

Additional contributions by Sarah Ebner and Emily Goldberg