Credit Suisse shares fell sharply again on Friday as confidence in the banking sector proved fragile. The shares were trading as much as 10 per cent lower during the day before closing 8 per cent weaker after a brief rally on Thursday.
Senior executives will hold meetings over the weekend to assess scenarios for the bank as it struggles to regain confidence from the market
At least four major banks, including Société Générale and Deutsche Bank, have put restrictions on trades involving Credit Suisse or its securities, according to five sources with direct knowledge of the matter.
Credit Suisse did not immediately respond to requests for comment. The bank has previously said that it is a strong, global bank. “We fulfil and basically overshoot all regulatory requirements. Our capital, our liquidity basis is very strong,” chief executive Ulrich Koerner said earlier this week in a media interview.
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The cautious stance adopted by Credit Suisse’s rivals comes after the Swiss central bank threw a lifeline to the lender after its shares were pummeled in the aftermath of the US banking crisis this week. The curbs add to the bank’s problems as it tries to restructure operations and find its footing after a series of costly scandals.
These five people with direct knowledge of the matter requested anonymity because of the sensitivity of the situation.
Société Générale is not increasing counterparty positions with the Swiss lender, according to two sources with direct knowledge of the situation, while Deutsche Bank has slashed the lending value it assigns to Credit Suisse securities, such as bonds, put up by its wealth management clients as collateral for loans.
HSBC’s private banking business has also started scrutinising its loans linked to Credit Suisse securities, a source with direct knowledge of the matter said. The source added that the bank has not taken any decision yet on lowering its exposure to the Swiss lender.
None of the banks had any formal comment to give.
Meanwhile the parent company of Silicon Valley Bank, the lender taken over by US regulators last week, has filed for Chapter 11 bankruptcy in a federal court in New York in an attempt to salvage value from two units – a broker-dealer and a technology investing business – that are separate from the main deposit-taking bank.
And shares in First Republic Bank tumbled yet again on Friday after a financial lifeline from large US banks that deposited $30 billion into its accounts failed to calm investor fears. – Reuters/The Financial Times Limited 2023
