A Swiss flag flies over a Credit Suisse sign in Bern, Switzerland
FABRICE COFFRINI | AFP | Getty Images
Credit Suisse executives are in talks with the bank’s top investors to reassure them amid growing concerns about the Swiss lender’s financial health, 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 had actively engaged with its key customers and counterparties over the weekend, adding that they were receiving “messages of support” from major investors.
Credit Suisse shares hit new lows last week. The stock is down about 55% since the start of the year.
Spreads on the bank’s credit default swaps (CDS), which provide investors with protection against financial risks such as default, rose sharply on Friday. They followed reports that the Swiss lender is looking to raise capital, citing a memo from its chief executive Ulrich Koerner.
FT said the executive denied reports that the Swiss bank had officially approached its investors to possibly raise more capital, and insisted that Credit Suisse was “trying to avoid such a move with the price of its stock at record highs and higher borrowing costs due to rating downgrades.”
The bank told Reuters it was reviewing its strategy which includes potential divestitures and asset sales, and an announcement is expected on Oct. 27, when the bank will release its third-quarter results.
Credit Suisse has also been in talks with investors to raise capital with various scenarios in mind, Reuters said, citing people familiar with the matter, saying this included a chance the bank could “largely” exit the market. American.
The latest news from Credit Suisse signals “difficult times” ahead, but that could lead to a change in direction from the U.S. Federal Reserve, John Vail, chief global strategist at Nikko Asset Management, said Monday on “Squawk Box Asia” from CNBC.
“The silver lining at the end of this period is that central banks will likely start to cool down for a while as inflation is down and financial conditions deteriorate significantly,” Vail said. “I don’t think it’s the end of the world.”
“We struggle to see anything systemic,” Citi analysts said in a report on the possible “contagion impact” on US banks by “a major European bank.” Analysts did not name Credit Suisse.
“We understand the nature of the concerns, but the current situation is day and night of 2007 because 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.