By Stefania Spezzati and Oliver Hirt
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 involved in the market turmoil triggered by the collapse of US lenders Silicon Valley Bank and Signature Bank last week, forcing the Swiss bank to obtain $54 billion in central bank funding.
Swiss regulators are encouraging the merger of UBS and Credit Suisse, but neither bank has wanted to do so, a source says. Regulators don’t have the power to force the merger, the person said.
The boards of UBS and Credit Suisse are expected to meet separately over the weekend, the Financial Times said.
Credit Suisse shares jumped 9% in post-market trade after the FT report. Credit Suisse and UBS declined to comment.
In the latest sign of their growing troubles, at least four major banks, including Société Générale SA and Deutsche Bank AG, have imposed restrictions on their dealings in Credit Suisse or its securities, five people with direct knowledge of the matter told Reuters.
“The Swiss central bank’s intervention was a necessary measure to quell the flames, but it may not be enough to restore confidence in Credit Suisse, so there is talk of further action,” said Frederique Carrier, head of investment strategy at RBC Wealth Management. .
Efforts to shore up Credit Suisse come as policymakers including the European Central Bank and US President Joe Biden seek to reassure investors and depositors that the global banking system is safe. But fears of broader problems in the sector persist.
Graphic: Credit Suisse and First Republic Bank https://fingfx.thomsonreuters.com/gfx/mkt/znvnblzmrvl/Pasted%20image%201679097444078.png
Already this week, big US banks provided a $30 billion lifeline to smaller lender First Republic, while US banks sought a record $153 billion in emergency liquidity from the Federal Reserve in recent days.
That reflected “funding and liquidity strains on banks, driven by weakening depositor confidence,” said ratings agency Moody’s, which this week downgraded its outlook on the US banking system to negative.
In Washington, the focus has turned to greater oversight to ensure that banks – and their executives – are held accountable.
Biden urged Congress to give regulators greater power over the banking industry, including imposing higher fines, recovering funds and banning employees of failed banks.
Some Democratic lawmakers have asked regulators and the Justice Department to investigate Goldman Sachs’ role in the SVB’s collapse, Representative Adam Schiff’s office said.
MARKET PROBLEMS REMAIN
Bank stocks around the world have taken a hit since the collapse of Silicon Valley Bank, raising questions about other weaknesses in the financial system.
Regional U.S. bank stocks fell sharply on Friday and the S&P Banks Index fell 4.6%, taking its decline over the past two weeks to 21.5%, its worst loss in two weeks since the COVID-19 pandemic. 19 shook the markets in March 2020.
First Republic Bank ended Friday down 32.8%, taking its 10-session loss to more than 80%. Moody’s downgraded the bank’s debt rating after the market close.
While support from some of the biggest names in US banking prevented the First Republic from collapsing this week, investors were taken aback by the disclosures about its cash position and how much emergency liquidity it needed.
SVB Financial Group has filed for supervised bankruptcy, days after regulators took over its Silicon Valley Bank unit.
Regulators have asked banks interested in buying SVB and Signature Bank to submit bids by Friday, people familiar with the matter said.
Regulators are considering retaining ownership of the bonds belonging to Signature and the SVB to allow smaller banks to participate in auctions for failed creditors, a source familiar with the matter said.
(Reporting by Reuters Offices; Writing by Lincoln Feast; Editing by William Mallard)