Credit Suisse Group AG went for a make-or-break weekend after some rivals grew cautious about their dealings with the bank as regulators urged it to pursue a deal with Swiss rival UBS AG.
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 Swiss bank has to tap $54 billion in central bank funding because of the collapse of Silicon Valley Bank and Signature Bank over the past week, which has led to the collapse of the 167-year-old bank.
Swiss regulators are encouraging UBS and Credit Suisse to merge, but neither bank wanted to do so, one source said. The person said that the regulators don't have the power to force the merger.
The boards of UBS and Credit Suisse were expected to meet over the weekend, according to the Financial Times.
Credit Suisse shares jumped 9% in after-market trading after the FT report. Credit Suisse and UBS didn't want to say anything.
There is talk about more measures, because of the Swiss central bank stepping in to calm the flames, but it might not be enough to restore confidence in Credit Suisse, said Frederique Carrier, head of investment strategy at RBC Wealth Management.
Efforts to shore up Credit Suisse came as policymakers including the European Central Bank and U.S. President Joe Biden tried to reassure investors that the global banking system is safe. There are still fears of bigger problems in the sector.
Big U.S. banks have provided a $30 billion lifeline for smaller lender First Republic this week, while U.S. banks sought a record $153 billion in emergency liquidity from the Federal Reserve in recent days.
Moody's, which downgraded its outlook on the U.S. banking system this week, downgraded its outlook on funding and lending strains on banks, driven by weakening depositor confidence.
In Washington, the focus was on more oversight to ensure that banks and their executives were held accountable.
Biden called for Congress to give regulators greater power over the banking sector, including imposing higher fines, clawing back funds and barring officials from failed banks.
Some Democratic lawmakers asked regulators and the Justice Department to probe the role of Goldman Sachs in SVB's collapse, said Adam Schiff, the office of Representative.
Since the collapse of Silicon Valley Bank, banking stocks around the world have been battered, raising questions about other weaknesses in the financial system.
U.S. regional bank shares fell sharply on Friday, and the S&P Banks index fell 4.6%, bringing its decline to 21.5%, its worst two-week calendar loss since the COVID 19 pandemic shook markets in March 2020.
The First Republic Bank lost more than 80% of its losses over the last 10 sessions, as it ended Friday down 32.8%. Moody's downgraded the bank's debt rating after the market close.
While some of the biggest names in the U.S. banking prevented First Republic's collapse this week, investors were startled with disclosures on its cash position and how much emergency liquidity it needed.
SVB Financial Group filed for a reorganization by a bankruptcy court a few days after regulators took over its Silicon Valley Bank unit.
The banks that were interested in buying SVB and Signature Bank were asked by regulators to submit bids by Friday, people familiar with the matter said.
A source familiar with the matter said that the regulators are considering retaining ownership of securities owned by Signature and SVB to allow smaller banks to participate in auctions for the collapsed lenders.