Banks scrutinize Credit Suisse products, interactions after takeover

March 25, 2023 12:26 AM AEDT | By Reuters
Follow us on Google News:

By Laura Matthews, Matt Tracy and Stefania Spezzati

NEW YORK/LONDON, March 23 (Reuters) - Some bankers and traders are grappling with how to interact with Credit Suisse across various markets including debt and foreign exchange, with some increasing their scrutiny when dealing with the Swiss bank or its products, sources said.

The caution comes after UBS Sunday offered to pay CHF 3 billion ($3.23 billion) for Credit Suisse, in a hastily-agreed merger engineered by Swiss authorities following a scramble to save the bank.

Last week, at least four major banks restricted new trades involving the Swiss bank or its securities while Credit Suisse worked to restore investor confidence and stop its shares from plummeting.

That caution continued into this week. While most trading between banks is secured by collateral, one senior banker at a major bank in London said that his bank had not resumed unsecured lending to Credit Suisse since last week.

A leveraged finance banker said that they were scrutinizing debt issuances that banker was an agent for to see if they are affected by Credit Suisse.

A senior foreign exchange trader at a large bank in Europe told Reuters that his bank was showing wider bid-ask spreads when dealing with Credit Suisse to compensate for the risk. Wider spreads increase trading costs.

Credit Suisse declined comment.

The cautious approach shows that bankers are still wrestling with the after effect of the UBS-Credit Suisse takeover and are concerned about what impact that, coupled with the present turmoil in banking, could have on certain areas of the markets.

The Swiss authorities and UBS are racing to close the takeover within as little as a month, two sources with knowledge of the plans told Reuters on Thursday, to try to retain the lender's clients and employees.

Since the turmoil facing Credit Suisse and regional banks began, banks have put much of their previously planned underwriting on hold until market volatility dies down, the leveraged finance banker said.

They are not the only ones treading cautiously with Credit Suisse. On Monday a section of Bank of America halted trading with a desk at Credit Suisse that uses computer-led strategies "out of an abundance of caution."

The senior FX trader told Reuters that it continues to trade with the Swiss bank because the deal brokered over the weekend has since restored confidence in doing so. (Reporting by Laura Matthews, Matt Tracy, Stefania Spezzati; editing by Megan Davies and Nick Zieminski)


The above content is directly sourced from Reuters under a contractual arrangement. The content is being provided as a convenience and for informational purposes only; and does not constitute an endorsement or approval by Kalkine Media of any of the products, services, or opinions of the organization or individual. The user is apprised that Kalkine Media bears no responsibility for the accuracy, legality, or content of Reuters, any external sites, or for that of subsequent links. The user is requested to contact Reuters directly for answers to questions regarding the content. Please note that Kalkine Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK