Credit Suisse under pressure to merge with UBS | – #Credit #Suisse #pressure #merge #UBS
March 18 (Reuters) – Credit Suisse Group AG ( CSGN.S ) opened a weekend after some rivals were wary of its relationship with the bank and regulators urged it to strike a deal with Swiss rival UBS AG ( UBSG ). Q).
Credit Suisse Chief Financial Officer Dixit Joshi and his team will hold meetings over the weekend to assess the bank’s strategic scenarios, people with knowledge of the matter said on Friday.
167 years old banklast week USA‘s creditors Silicon Valley Bank and Signature Bankis the biggest name caught up in the market turmoil caused by the bankruptcy of billion dollars forced to separate.
Credit Suisse lost a quarter of its market value on Thursday after wild swings in the bank’s share price this week.
To overcome the crisis, Swiss regulators are encouraging UBS and Credit Suisse to merge, but neither bank is willing to do so, one source said. Regulators do not have the authority to force the merger, the person said.
Financial Times news reports that UBS and Credit Suisse boards were expected to meet separately over the weekend.
Credit Suisse and UBS declined to comment.
The mood in Switzerland, long seen as a symbol of banking stability, was somber as executives grappled with the future of the country’s biggest lenders.
On the front page of the newspaper “Neue Zuercher Zeitung” read the headline “Banks under constant stress”.
In a sign of its weakness, at least four of Credit Suisse’s main rivals, including Societe Generale SA ( SOGN.PA ) and Deutsche Bank AG ( DBKGn.DE ), have placed restrictions on trading in the Swiss bank or its securities, five Reuters- people with direct information on the issue said.
“The Swiss central bank’s intervention was a necessary step to calm the flames, but may not be enough to restore confidence in Credit Suisse, so there is talk of more action,” said Frederique Carrier, head of investment strategy at RBC Wealth Management.
Efforts to strengthen Credit Suisse, Europe Central Bank and USA President Joe Biden including as politicians try to reassure investors and depositors that the global banking system is safe. But fears of wider problems in the sector persist.
Credit Suisse and First Republic Bank
Already this week USA’s big banks 30 for smaller lender First Republic ( FRC.N ). billion provided a dollar lifeline, while US banks 153 from the Federal Reserve in recent days billion dollars wanted to get immediate liquidity.
This reflects “funding and liquidity pressures on banks as a result of weakening depositor confidence,” said Moody’s, the rating agency that cut its outlook for the US banking system to negative this week.
In Washington, the focus is on greater oversight to hold banks and their executives accountable.
Biden It has called on Congress to give regulators more power over the sector, including imposing higher fines, clawing back funds and banning officials from failed banks.
Representative Adam Schiff’s office said some Democratic lawmakers have asked regulators and the Justice Department to investigate Goldman Sachs’ ( GS.N ) role in the collapse of SVB.
MARKET PROBLEMS ARE LONG
After the collapse of Silicon Valley Bank, banking stocks globally were shaken, raising questions about other weaknesses in the financial system.
U.S. regional bank stocks fell sharply on Friday, with the S&P Banks Index (.SPXBK) falling 21.5% to 2020It posted the worst two-week calendar loss since the pandemic rocked markets in March.
First Republic Bank last fell 32.8% on Friday 10 increased its loss in the session to more than 80%.
While support from some of the biggest names in US banking prevented First Republic from collapsing this week, investors were surprised by revelations about its cash position and how urgently it needs liquidity.
INTEREST RISK
SVB’s failure highlighted how the relentless rate hike campaign by the US Federal Reserve and other central banks has put pressure on the banking sector.
Many analysts and regulators have attributed SVB’s downfall to its specialized, technology-driven business model, while the broader banking system is more resilient thanks to reforms enacted in the years since the global financial crisis.
However, a top official at China’s central bank said on Saturday that high interest rates in major advanced economies could continue to cause problems for the financial system.
Reuters bureaus report; Written by Lincoln Feast and Toby Chopra; Edited by William Mallard, Kirsten Donovan
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Tom Sims
2023-03-18 14:43:44
Source – reuters
Translation“24 HOURS”