Jefferies sees a softer impact of Credit Suisse on the Indian banking sector

Credit Suisse has only one branch in India and has total assets of over $2.42 billion. (File)

India’s banking sector is likely to be cushioned by the challenges at Credit Suisse because of the Swiss lender’s relatively small presence in the country, equity analysts at Jefferies said on Thursday.

Credit Suisse has a 1.5% share of foreign bank assets in India and a “small” 0.1% share of total banking assets in the country, Jefferies estimated. It has only one branch in India and total assets of more than 200 billion rupees ($2.42 billion), he said.

“Given Credit Suisse’s exposure to the Indian banking sector, we see mild revisions in counterparty risk assessments, particularly in the derivatives market,” analysts Prakhar Sharma and Vinayak Agarwal said in a note.

Earlier in the day, Credit Suisse said it would borrow up to $54 billion from the Swiss central bank to boost liquidity and boost investor confidence after falling shares fueled fears of a global banking crisis.

Credit Suisse, Switzerland’s second-largest bank, was the first major global bank to fall into emergency mode after the 2008 financial crisis, and its problems have raised doubts about whether central banks can continue to fight inflation with aggressive interest rates. hikes.

This fear has rattled financial markets globally as well as in India.

Jefferies said it would focus on liquidity issues and any deviations in counterparty risk assessment at Indian banks, particularly in derivatives.

The brokerage expects the Reserve Bank of India to closely monitor liquidity issues and counterparty risks and intervene as necessary.

It could also cause institutional deposits to shift toward larger or better quality banks, Jefferies said.

(Except for the headline, this story was not edited by NDTV staff and was published on a syndicated channel.)

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