Cautiously optimistic for Credit Suisse

Cautiously optimistic for Credit Suisse

After the recent share slump of Credit Suisse that caused panic in the market about the banking crisis, the bank's chief financial officer Dixit Joshi said he and his team would hold meetings over the weekend to assess strategic scenarios for the bank.

The Swiss regulators are urging UBS to merge with Credit Suisse but none of the banks are ready to do the same, and the regulators are not authorised to force the merger.

The boards of Credit Suisse and UBS were due to meet separately over the weekend, according to the Financial Times.

The 167-year-old bank was in big trouble after a string of scandals over the past several years, top management changes, multi-billion dollar losses and an uninspiring strategy. This is the first time a major global bank has tried emergency measures since the 2008 financial crisis, amid concerns of contagion in the banking industry and uncertainty surrounding the ability of central banks to maintain their aggressive rate hikes aimed at curbing inflation.

The collapse of the Silicon Valley Bank and Signature Bank also rocked the global banking scenario.

People aware of the matter told Reuters that at least four large banks, including Societe Generale SA and Deutsche Bank AG, have put limits on their dealings with Credit Suisse or its securities.

There is talk about more measures because of the Swiss central bank stepping in, which is a necessary step 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.

As the European Central Bank and U.S. President Joe Biden worked to reassure investors and depositors that the global banking system is secure, efforts were made to support Credit Suisse. Large US banks including Morgan Stanley, Citigroup, Bank of America Corp, Wells Fargo, Goldman Sachs and JPMorgan Chase injected $30 billion in deposits into First Republic Bank in a bid to help the lender get caught up in a crisis caused by the collapse of two other mid-size US banks over the past week.

Moody s, downgraded its outlook on the U.S. banking system this week because of funding and liquidity strains on banks, driven by weakening depositor confidence.

Since the Silicon Valley Bank went bankrupt, banks have taken a beating in their stock market, increasing concerns about broader flaws in the financial system.

The US regional bank shares plummeted dramatically on Friday, with the S&P Banks index down 4.6%, pushing its two week decline to 21.5%, the largest two-week decline since the COVID-19 epidemic rattled markets in March 2020.