Credit Suisse Group AG faces a make-or-break weekend as it holds meetings to assess strategic scenarios after some of its rivals set restrictions on their trades with the bank amid calls for it to pursue a deal with fellow Swiss lender UBS AG. The 167-year-old bank has been affected by market turmoil following the collapse of US lenders Silicon Valley Bank and Signature Bank, forcing Credit Suisse to tap $54bn in central bank funding. While Swiss regulators are encouraging a merger between the two banks, they do not have the power to force it. Both Credit Suisse and UBS declined to comment on the situation.
Important Details about Credit Suisse meets to weigh options, under pressure to merge with UBS –
– Credit Suisse Group AG began a make-or-break weekend as some rivals grew cautious in their dealings with the bank.
– Credit Suisse CFO and his teams will hold meetings over the weekend to assess strategic scenarios for the bank.
– The bank is the biggest name ensnared in market turmoil unleashed by the collapse of U.S. lenders.
– Swiss regulators are encouraging UBS and Credit Suisse to merge but neither bank wanted to do so.
– At least four major banks have put restrictions on their trades involving Credit Suisse or its securities.
– Efforts to shore up Credit Suisse come as policymakers sought to reassure investors and depositors the global banking system is safe.
– Big U.S. banks provided a $30 billion lifeline for smaller lender First Republic.
– U.S. banks altogether sought a record $153 billion in emergency liquidity from the Federal Reserve in recent days.
– Biden called on Congress to give regulators greater power over the banking sector.
– Banking stocks globally have been battered since Silicon Valley Bank collapsed.
– First Republic Bank ended Friday down 32.8%, bringing its loss over the last 10 sessions to more than 80%.
Credit Suisse Faces Make-or-Break Weekend as Rivals Grow Cautious
As March 18th dawned, Credit Suisse Group AG (CSGN.S) began a pivotal weekend as regulators urged it to pursue a deal with Swiss rival UBS AG (UBSG.S) in the wake of market turmoil unleashed by the collapse of U.S. lenders Silicon Valley Bank and Signature Bank over the past week. Experts predict that the bank is facing a make-or-break scenario, as rivals grew cautious in their dealings with the bank, and Swiss regulators encouraged the bank to merge with UBS.
Credit Suisse CFO Dixit Joshi and his team will hold meetings over the weekend to assess strategic scenarios for the bank, according to a Reuters report from Friday, March 17th. Despite the regulator’s push for a merger between Credit Suisse and UBS, sources confirm that neither bank is particularly keen to pursue such an outcome.
The turmoil first hit Credit Suisse after it was forced to tap $54 billion in central bank funding in response to the collapse of U.S. lenders, which sparked fears about the stability of the global banking system. While efforts to shore up Credit Suisse have been in progress, at least four major banks including Societe Generale SA (SOGN.PA) and Deutsche Bank AG (DBKGn.DE), have put restrictions on their trades involving Credit Suisse or its securities.
Meanwhile, the Financial Times has reported that the boards of UBS and Credit Suisse were expected to meet separately over the weekend. Credit Suisse saw a 9% jump in its shares in after-market trading following the report, while both banks declined to provide comment.
Experts note that even the Swiss central bank’s step to calm the flames cannot be deemed sufficient to restore confidence in Credit Suisse. Frederique Carrier, head of investment strategy at RBC Wealth Management, indicated that there is talk about more measures to be implemented.
Credit Suisse and First Republic Bank
This week, the global banking system saw much-needed reassurance from policymakers including the European Central Bank and U.S. President Joe Biden. While fears of broader troubles in the sector still persist, big U.S. banks provided a $30 billion lifeline for smaller lender First Republic (FRC.N).
However, such support from major banks was necessitated by “funding and liquidity strains on banks, driven by weakening depositor confidence,” said rating agency Moody’s, which downgraded its outlook on the U.S. banking system to negative earlier this month. As banking stocks around the world wobbled after the collapse of Silicon Valley Bank, U.S. regional bank shares fell sharply on Friday. The S&P Banks index (.SPXBK) tumbled 4.6%, bringing its decline over the past two weeks to 21.5%, its worst two-week calendar loss since the COVID-19 pandemic shook markets in March 2020.
First Republic Bank ended Friday down 32.8%, following a loss of over 80% over the last 10 sessions. Moody’s downgraded the bank’s debt rating after the market’s close, highlighting the bank’s disclosures on its cash position and revealing how much emergency liquidity it required.
SVB Financial Group filed for bankruptcy court-supervised reorganization, days after regulators took over its Silicon Valley Bank unit. Regulators had reportedly asked banks interested in buying SVB and Signature Bank to submit bids by Friday, March 18th.
In the latest developments, regulators are considering retaining control of securities owned by Signature and SVB with the intention of facilitating smaller banks’ participation in auctions for the collapsed lenders.
Greater Oversight to Ensure Banks and Their Executives are Held Accountable
As market troubles persist, Washington’s focus turned to greater oversight to ensure that banks – and their executives – are held accountable. President Biden has called on Congress to give regulators greater power over the banking sector, including the capacity to impose higher fines, claw back funds and bar officials from failed banks. In a separate move, some Democratic lawmakers have asked regulators and the Justice Department to probe the role of Goldman Sachs (GS.N) in the collapse of SVB.
The global economy continues to ride the waves generated by the collapse of Silicon Valley Bank and Signature Bank. As policymakers and regulators seek to reassure depositors and investors about the stability of the global banking system, concerns persist about broader challenges in the sector. With new developments emerging with each passing day, Credit Suisse’s future remains uncertain till the situation resolves.
*This article is rewritten by an AI algorithm from a Reuters’ article. Hence, there may be some grammatical errors.*