Monday, March 27, 2023

Credit Suisse: Credit Suisse weighs survival options under pressure to merge with UBS – Usky News



Credit Suisse Group AG started the weekend strong after some rivals urged it to exercise caution in its dealings with the bank and strike a deal with a Swiss rival. UBS AG.
Credit Suisse Chief Financial Officer Dixit Joshi and his teams will hold meetings over the weekend to assess strategic scenarios for the bank, people with knowledge of the matter said on Friday.
The 167-year-old bank is the biggest name caught in the market turmoil sparked by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week, which forced the Swiss bank to tap $54 billion in central bank funding. Did.
Credit Suisse had lost a quarter of its market value by Friday night, following huge volatility in the bank’s share price this week.
To end the crisis, Swiss regulators are encouraging UBS and Credit Suisse to merge but neither bank wants to do so, a source said. Regulators do not have the power to force a merger, the person said.
The Financial Times said the boards of directors of UBS and Credit Suisse are expected to meet separately over the weekend.
Credit Suisse and UBS declined to comment.
The mood in Switzerland, long considered an icon for banking stability, was anxious as authorities grappled with the future of the country’s biggest lenders.
“Banks under permanent stress” read the front page headline of the Neue Z├╝rcher Zeitung newspaper.
In a sign of its vulnerability, at least four of Credit Suisse’s major rivals, including Societe Generale SA and Deutsche Bank AG, have banned their trades involving the Swiss bank or its securities, five people with direct knowledge of the matter told Reuters. told.
“The move by the Swiss central bank was a necessary step to douse the fire, but it may not be enough to restore confidence in Credit Suisse, so more measures are needed,” said Frederic Carrier, head of investment strategy at RBC Wealth Management. is being talked about.”
The efforts to shore up Credit Suisse come as policymakers including the European Central Bank and US President Joe Biden sought to reassure investors and depositors that the global banking system is safe. But there is a possibility of a wider crisis in this area.
Already this week, big US banks provided a $30 billion lifeline for smaller lender First Republic, while US banks sought a record $153 billion in emergency liquidity from the Federal Reserve in recent days.
Ratings agency Moody’s said it reflected “funding and liquidity stress on banks driven by weak depositor confidence”, which this week lowered its outlook on the US banking system to negative.
In Washington, the focus shifted to greater oversight to ensure that banks — and their executives — were held accountable.
Biden called on Congress to give regulators more power over the sector, including imposing higher fines, withholding funds and barring executives from failed banks.
Some Democratic lawmakers have asked regulators and the Justice Department to investigate Goldman Sachs’ role. svbcollapse, said the office of Representative Adam Schiff.
Banking stocks have tumbled globally after the collapse of a Silicon Valley bank, raising questions about other weaknesses in the financial system.
US regional bank shares fell sharply on Friday and the S&P Bank Index posted its worst two-week calendar loss since the pandemic hit in March 2020, falling 21.5%.
First Republic Bank ended Friday down 32.8%, bringing its losses in the last 10 sessions to more than 80%.
While support from some of the biggest names in US banking staved off First Republic’s collapse this week, investors were shocked by revelations of its cash position and how much emergency liquidity it needed.
The failure of the SVB brought into focus how a relentless campaign to raise interest rates by the US Federal Reserve and other central banks was putting pressure on the banking sector.
Many analysts and regulators have stated that SVB’s downfall was due to its specialized, technology-focused business model, while the wider banking system was more robust due to reforms adopted in the years following the global financial crisis.
However, a senior official of China’s central bank said on Saturday that higher interest rates in major developed economies could cause problems for the financial system.

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