March 18 (Reuters) – Credit Suisse Group AG (CSGN.S) entered a breakthrough weekend after some rivals grew cautious about their dealings with the bank as regulators urged it to strike a deal with its Swiss rival UBS AG (UBSG.S).
Dixit Joshi, chief financial officer of Credit Suisse, and his teams will meet this weekend to assess the bank’s strategic scenarios, people familiar with the matter said on Friday.
The 167-year-old bank is the biggest name caught in the turmoil of the market sparked by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week, forcing the Swiss bank to draw 54 billion dollars in central bank financing.
Swiss regulators are encouraging UBS and Credit Suisse to merge, but neither bank wanted to, a source said. Regulators don’t have the power to force the merger, the person said.
The boards of UBS and Credit Suisse were due to meet separately over the weekend, the Financial Times said.
Shares of Credit Suisse jumped 9% in aftermarket trading following the FT report. Credit Suisse and UBS declined to comment.
In the latest sign of its mounting difficulties, at least four major banks, including Societe Generale SA (SOGN.PA) and Deutsche Bank AG (DBKGn.DE), have imposed restrictions on their transactions involving Credit Suisse or its securities, five people with direct knowledge of the matter told Reuters.
“The intervention of the Swiss central bank was a necessary step to calm the flames, but it may not be enough to restore confidence in Credit Suisse, so there is talk of more measures,” said Frédérique 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 have sought to reassure investors and depositors of the safety of the global banking system. But fears of wider unrest in the sector persist.
Already this week, major US banks have provided a $30 billion lifeline to small lender First Republic (FRC.N), while US banks have requested a total of $153 billion in emergency liquidity from the Federal Reserve in recent days.
This reflects “funding and liquidity strains on banks, due to weakening depositor confidence,” said ratings agency Moody’s, which this week lowered its outlook on the US banking system to negative.
In Washington, the focus has shifted to greater oversight to ensure banks — and their executives — are held accountable.
Biden called on Congress to give regulators greater power over the banking industry, including imposing higher fines, recovering funds and banning officials from failing banks.
Some Democratic lawmakers have asked regulators and the Justice Department to investigate Goldman Sachs’ (GS.N) role in the collapse of SVB, Rep. Adam Schiff’s office said.
MARKET DISTURBANCE PERSISTS
Banking stocks around the world have been battered since the collapse of Silicon Valley Bank, raising questions about other weaknesses in the financial system.
Shares of U.S. regional banks fell sharply on Friday and the S&P Banks Index (.SPXBK) fell 4.6%, taking its decline over the past two weeks to 21.5%, its worst two-week calendar loss since the COVID-19 pandemic rocked markets in March. 2020.
First Republic Bank ended Friday down 32.8%, bringing its loss over the last 10 sessions to more than 80%. Moody’s downgraded the bank’s debt rating after the market closed.
As support from some of the biggest names in US banking prevented the collapse of the First Republic this week, investors were surprised by revelations about its cash position and how much emergency cash it has. needed.
SVB Financial Group has filed for a bankruptcy court-supervised reorganization, days after regulators took over its Silicon Valley Bank unit.
Regulators had asked banks interested in buying SVB and Signature Bank to submit offers by Friday, people familiar with the matter said.
Regulators are considering retaining ownership of securities held by Signature and SVB to allow smaller banks to participate in auctions for collapsed lenders, a source familiar with the matter said.
Reports from Reuters offices; Written by Lincoln Feast; Editing by William Mallard
Our standards: The Thomson Reuters Trust Principles.