Credit Suisse headed for a crucial weekend as executive hold talks
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Credit Suisse is facing a crucial weekend as the lender’s future hangs in the balance. This weekend, the Chief Financial Officer at Credit Suisse, Dixit Joshi, and his teams will hold talks to assess several strategic decisions for the bank.
Credit Suisse faces a crucial weekend
Swiss regulators have expressed interest in the matter and are advocating for a merger with UBS. However, a source with knowledge of the matter said that the two banks opposed the merger. A report by Financial Times said that the boards of Credit Suisse and UBS would hold talks separately this weekend.
The report by Financial Times triggered an increase in Credit Suisse shares in after-market hours. Credit Suisse has been facing turmoil over the past week, with its shares dropping to all-time lows. The situation forced the lender to borrow $54 billion from the Swiss central bank.
As the lender’s troubles continue, some of the largest banks, such as Deutsche Bank and Societe Generale, have imposed restrictions on the trades involving Credit Suisse and the lender’s shares.
The efforts made by the Swiss central bank to provide funding for Credit Suisse are doing little to shore up confidence. The effort comes as policymakers such as the European Central Bank and the US government reassure investors that there is no risk to the global banking system.
Some of the largest banks in the US are also jumping in to rescue smaller institutions, such as First Republic Bank. US banks also received a record $153 billion from the Federal Reserve this week amid the chaos caused by the collapse of Silicon Valley Bank.
In the US, regulators are focusing on the compliance of banks and their executives. US President Joe Biden assured Americans their deposits were safe earlier this week. On Friday, Biden urged the US Congress to give regulators more oversight power in the banking sector. Some legislatures are also calling for investigations into the role played by Goldman Sachs in the collapse of Silicon Valley Bank.
Uncertainty in the banking sector
Bank stocks witnessed increased volatility this week after the demise of Silicon Valley Bank and Signature Bank. The collapse of two leading lenders in the US raised concerns over the financial system’s health.
On Friday, the shares of regional US banks tumbled as the S&P 500 index dropped by 4.6%. The S&P 500 is down by 21.5% in the last two weeks, marking its worst 14-day loss since March 2020 during the COVID outbreak.
First Republic Bank has suffered the most losses, dropping by 3.8% on Friday. The bank’s stock is down by more than 80% since the SVB crisis hit the market. However, this bank is getting support from some of the largest financial institutions in the US.
US regulators have also urged the financial institutions that want to buy SVB and Signature Bank to submit bids by Friday. If a sale is successful, US regulators have expressed willingness to backstop losses at the two banks.
