Banks scrutinize Credit Suisse products, FX interactions after takeover

Banks scrutinize Credit Suisse products, FX interactions after takeover

Banks are scrutinizing Credit Suisse products, interactions after the takeover NEW YORK LONDON Reuters - Some bankers and traders are grappling with how to interact with Credit Suisse across various markets including debt and foreign exchanges, with some increasing scrutiny when dealing with the Swiss bank or its products, sources said.

The caution comes after UBS offered to pay CHF 3 billion $3.23 billion for Credit Suisse, in a merger that was orchestrated by Swiss authorities after a scramble to save the bank.

At least four major banks stopped new trades of the Swiss bank or its securities last week while Credit Suisse worked to restore investor confidence and stop its shares from plummeting.

The caution continued into the week. A bank senior banker at a major bank in London said his bank had not resumed unsecured lending to Credit Suisse since last week, despite the fact that most of the banks are secured by collateral.

A leveraged finance banker said they were looking at debt issuances that banker was an agent for to see if they are affected by Credit Suisse.

A senior foreign exchange trader at a large bank in Europe told Reuters that his bank was showing wider bid-ask spreads when dealing with Credit Suisse to compensate for the risk. The cautious approach shows that bankers are still wrestling with the aftereffects of the UBS-Credit Suisse takeover and are concerned about the impact that this could have on certain areas of the markets, as well as the current turmoil in banking.

The Swiss authorities and UBS are trying to keep the lender's clients and employees in as little as a month, two sources with knowledge of the plans told Reuters on Thursday.

Since the turmoil facing Credit Suisse and regional banks began, banks have put much of their planned underwriting on hold until market volatility dies down, the leveraged finance banker said.

They are not the only ones treading cautiously with Credit Suisse. On Monday a section of the Bank of America stopped trading with a desk at Credit Suisse that uses computer-led strategies out of an abundance of caution. The deal brokered over the weekend has since restored confidence in doing so, according to the senior FX trader.