Credit Suisse is under pressure to merge with UBS

Credit Suisse Group AG kicked off the weekend after some rivals became cautious in their dealings with the bank and regulators urged it to pursue a deal with Swiss rival UBS AG.

Credit Suisse’s chief financial officer, Dixit Joshi, and his team said they would hold meetings over the weekend to assess the bank’s strategic scenarios, people familiar with the matter said Friday.

The 167-year-old bank is the biggest name embroiled in the market turmoil unleashed by the collapse of US lenders Silicon Valley Bank and Signature Bank last week, forcing the Swiss bank to leverage US$54 billion (AU$80 billion) in the bank. Central. financing.

One source said Swiss regulators were encouraging UBS and Credit Suisse to merge, but neither wanted to. The person said the regulators do not have the authority to force the merger.

The Financial Times said the boards of UBS and Credit Suisse are expected to meet separately over the weekend.

Credit Suisse shares jumped 9 percent in after-market trading following the Financial Times report.

Credit Suisse and UBS declined to comment.

In the latest sign of its escalating problems, at least four major banks, including Societe Generale and Deutsche Bank, have imposed restrictions on their trading involving Credit Suisse or its securities, five people with direct knowledge of the matter told Reuters.

“The SNB’s intervention was a necessary step to quell the flames, but it may not be enough to restore confidence in Credit Suisse, so there is talk of further action,” said Frederic Carrier, head of investment strategy at RBC Wealth Management.

The effort to shore up Credit Suisse comes as policymakers, including the European Central Bank and US President Joe Biden, have sought to reassure investors and depositors that the global banking system is secure.

But fears of wider problems in the sector remain.

Already this week, major US banks have offered a US$30 billion (AU$44 billion) lifeline to smaller lender First Republic, while US banks in all have sought a record US$153 billion (AU$226 billion) in emergency liquidity. from the Fed in recent days.

This reflects “funding and liquidity pressures on banks, driven by weak depositor confidence,” ratings agency Moody’s said, which this week downgraded its outlook on the US banking system to negative.

In Washington, the focus has shifted to greater oversight to ensure banks — and their CEOs — are held accountable.

Biden has called on Congress to give regulators greater power over the banking sector, including imposing higher fines and refunds and barring officials from failing banks.

Some Democratic lawmakers have asked regulators and the Justice Department to investigate Goldman Sachs’ role in the SVB collapse, Rep. Adam Schiff’s office said.

Banking stocks globally have taken a hit since the Silicon Valley bank collapse, raising questions about other weaknesses in the financial system.

While support from some of the biggest names in US banks prevented First Republic from collapsing this week, investors were stunned by the disclosure of its cash position and how much emergency liquidity it needs.

SVB Financial Group filed for bankruptcy for a court-supervised reorganization days after regulators took over the Silicon Valley bank unit.

Banks interested in buying SVB and Signature Bank have been asked by regulators to submit bids by Friday, people familiar with the matter said.

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