Credit Suisse Group AG opened the weekend after some rivals expressed caution over its relationship with the bank and regulators urged it to pursue 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 the bank’s strategic scenarios, people familiar with the matter said on Friday.
The 167-year-old bank is the biggest name in the market turmoil caused by the collapse of US lenders Silicon Valley Bank and Signature Bank last week, which forced the Swiss bank to use $54 billion in central bank funding.
After wild swings in the bank’s shares this week, Credit Suisse lost a quarter of its market value on Friday night.
Swiss regulators are urging UBS and Credit Suisse to merge to resolve the crisis, but neither bank is willing to do so, one source said. Regulators have no power to force the merger, the person said.
According to the Financial Times, the boards of UBS and Credit Suisse will meet privately over the weekend.
Credit Suisse and UBS declined to comment.
The sentiment, seen as a symbol of banking stability in Switzerland, was sobering as executives grappled with the future of the country’s biggest lenders.
The front page of the Neue Zuercher Zeitung read the headline “Banks under permanent stress”.
In a sign of its vulnerability, at least four of Credit Suisse’s main rivals, including Societe Generale SA and Deutsche Bank AG, have restricted trading in the Swiss bank or its securities, five people with direct knowledge of the matter told Reuters.
“The intervention of the Swiss central bank was a necessary step to douse the flames, but it may not be enough to restore confidence in Credit Suisse, so there is talk of additional measures,” said Frederic Carrier, head of investment strategy at RBC Wealth Management.
The effort to shore up Credit Suisse comes as politicians, including the European Central Bank and US President Joe Biden, try to reassure investors and depositors that the global banking system is safe. But there are still fears that the sector will face major challenges.
Major U.S. banks this week provided $30 billion in bailouts to smaller lender First Republic, while U.S. banks have asked the Federal Reserve for a record $153 billion in emergency liquidity in recent days.
That reflected “funding and liquidity challenges at banks caused by weakening investor confidence,” said Moody’s, which cut its outlook for the US banking system to negative this week.
In Washington, the focus has been on greater oversight to ensure that banks and their executives are held accountable.
Biden has called on Congress to give regulators more power over the sector, including imposing higher fines, clawbacks and banning officials from failing banks.
Some Democratic lawmakers have asked regulators and the Justice Department to investigate Goldman Sachs’ role. SVB‘s collapse, Rep. Adam Schiff’s office said.
After the collapse of the Silicon Valley bank, bank stocks around the world collapsed and questions arose about other weaknesses in the financial system.
US regional bank stocks fell sharply on Friday and the S&P Banks Index posted its worst two-week calendar loss since the pandemic rocked markets in March 2020, falling 21.5%.
First Republican Bank fell 32.8% on Friday, bringing its losses over the past 10 sessions to more than 80%.
Although the support of the biggest figures in US banking prevented First Republic from collapsing this week, investors were shocked by revelations about its cash position and how much emergency liquidity it needs.
The failure of SVB highlighted how the US Federal Reserve and other central banks’ relentless campaign to raise interest rates has put pressure on the banking sector.
Many analysts and regulators said SVB’s downfall was due to its specialized, technology-focused business model, while the broader banking system was made more robust by reforms enacted in the years following the global financial crisis.
However, a senior official at China’s central bank said on Saturday that higher interest rates in major advanced economies could cause problems for the financial system.
Credit Suisse Chief Financial Officer Dixit Joshi and his teams will hold meetings over the weekend to assess the bank’s strategic scenarios, people familiar with the matter said on Friday.
The 167-year-old bank is the biggest name in the market turmoil caused by the collapse of US lenders Silicon Valley Bank and Signature Bank last week, which forced the Swiss bank to use $54 billion in central bank funding.
After wild swings in the bank’s shares this week, Credit Suisse lost a quarter of its market value on Friday night.
Swiss regulators are urging UBS and Credit Suisse to merge to resolve the crisis, but neither bank is willing to do so, one source said. Regulators have no power to force the merger, the person said.
According to the Financial Times, the boards of UBS and Credit Suisse will meet privately over the weekend.
Credit Suisse and UBS declined to comment.
The sentiment, seen as a symbol of banking stability in Switzerland, was sobering as executives grappled with the future of the country’s biggest lenders.
The front page of the Neue Zuercher Zeitung read the headline “Banks under permanent stress”.
In a sign of its vulnerability, at least four of Credit Suisse’s main rivals, including Societe Generale SA and Deutsche Bank AG, have restricted trading in the Swiss bank or its securities, five people with direct knowledge of the matter told Reuters.
“The intervention of the Swiss central bank was a necessary step to douse the flames, but it may not be enough to restore confidence in Credit Suisse, so there is talk of additional measures,” said Frederic Carrier, head of investment strategy at RBC Wealth Management.
The effort to shore up Credit Suisse comes as politicians, including the European Central Bank and US President Joe Biden, try to reassure investors and depositors that the global banking system is safe. But there are still fears that the sector will face major challenges.
Major U.S. banks this week provided $30 billion in bailouts to smaller lender First Republic, while U.S. banks have asked the Federal Reserve for a record $153 billion in emergency liquidity in recent days.
That reflected “funding and liquidity challenges at banks caused by weakening investor confidence,” said Moody’s, which cut its outlook for the US banking system to negative this week.
In Washington, the focus has been on greater oversight to ensure that banks and their executives are held accountable.
Biden has called on Congress to give regulators more power over the sector, including imposing higher fines, clawbacks and banning officials from failing banks.
Some Democratic lawmakers have asked regulators and the Justice Department to investigate Goldman Sachs’ role. SVB‘s collapse, Rep. Adam Schiff’s office said.
After the collapse of the Silicon Valley bank, bank stocks around the world collapsed and questions arose about other weaknesses in the financial system.
US regional bank stocks fell sharply on Friday and the S&P Banks Index posted its worst two-week calendar loss since the pandemic rocked markets in March 2020, falling 21.5%.
First Republican Bank fell 32.8% on Friday, bringing its losses over the past 10 sessions to more than 80%.
Although the support of the biggest figures in US banking prevented First Republic from collapsing this week, investors were shocked by revelations about its cash position and how much emergency liquidity it needs.
The failure of SVB highlighted how the US Federal Reserve and other central banks’ relentless campaign to raise interest rates has put pressure on the banking sector.
Many analysts and regulators said SVB’s downfall was due to its specialized, technology-focused business model, while the broader banking system was made more robust by reforms enacted in the years following the global financial crisis.
However, a senior official at China’s central bank said on Saturday that higher interest rates in major advanced economies could cause problems for the financial system.
