A Swiss flag flies above a Credit Suisse sign in Bern, Switzerland
FABRIC COFFRINI | AFP | Getty Images
Credit Suisse executives are in talks with the bank’s main investors to reassure them amid rising concerns about the financial health of the Swiss lender, the Financial Times reported, citing people involved in the talks.
An executive involved in the talks told the Financial Times that the bank’s teams actively engaged with its top clients and counterparties over the weekend, adding that they had received “messages of support” from top investors.
Credit Suisse shares hit new lows last week. The stock is down about 55% year-to-date.
Spreads on the bank’s credit default swaps (CDS), which offer investors protection against financial risks such as defaults, widened sharply on Friday. They followed reports that the Swiss lender wanted to raise capital, citing a memo from its CEO, Ulrich Koerner.
FT said the executive denied reports that the Swiss bank had formally approached its investors about a possible capital raise, insisting that Credit Suisse was “attempting to make such a move with its share price at record lows and higher borrowing costs due to rating downgrades.” avoid”.
The bank told Portal that it is in the process of a strategy review that includes potential divestitures and asset sales and that an announcement is expected on Oct. 27 when the bank reports its third-quarter results.
Credit Suisse has also been in talks with investors to have capital with various scenarios in mind, Portal said, citing people familiar with the matter who said there was a possibility the bank “largely” exits the US market.
The latest from Credit Suisse signals an upcoming “difficult period” but could lead to a change in the Federal Reserve, John Vail, chief global strategist at Nikko Asset Management, said on CNBC’s Squawk Box Asia on Monday.
“The silver lining at the end of this period is that central banks are likely to start softening at some point, both as inflation has come down and financial conditions are deteriorating dramatically,” Vail said. “I don’t think it’s the end of the world.”
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“We’re struggling to see anything systemic,” analysts at Citi said in a report on the possible “contagion effect” on US banks from “a major European bank.” The analysts did not name Credit Suisse.
“We understand the nature of the concerns, but the current situation is day and night of 2007 as balance sheets are fundamentally different in terms of capital and liquidity,” the report said, referring to the financial crisis that erupted in 2007.
“We think US bank stocks are very attractive here,” the report said.
Read the full Financial Times report here.