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Credit Suisse meets to evaluate options, under pressure from merger with UBS

Credit Suisse meets to evaluate options, under pressure from merger with UBS

March 18 (Reuters) – Credit Suisse Group (CSGN.S) kicked off the weekend after some rivals became cautious in their dealings with the bank as regulators urged it to pursue a deal with Swiss rival UBS AG (UBSG). s).

Credit Suisse Chief Financial Officer Dixit Joshi and his team said on Friday that they will hold meetings over the weekend to assess the bank’s strategic scenarios.

The 167-year-old bank is the biggest name embroiled in the market turmoil that unleashed the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week, forcing the Swiss bank to tap $54 billion in central bank 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% in after-market trading following the Financial Times report. Credit Suisse and UBS declined to comment.

In the latest sign of its mounting troubles, at least four major banks, including Societe Generale SA (SOGN.PA) and Deutsche Bank AG (DBKGn.DE), have placed restrictions on their trades involving Credit Suisse or its securities, five people have said. Direct knowledge of the matter to 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.

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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.

Credit Suisse and First Republic Bank

Already this week, major US banks have offered a $30 billion lifeline to smaller lender First Republic (FRCN), while US banks in all have sought $153 billion in emergency liquidity from the Federal Reserve 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 (GS.N)’s role in the SVB collapse, Rep. Adam Schiff’s office said.

Market problems remain

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

US regional bank stocks fell sharply on Friday and the S&P Banks Index (.SPXBK) fell 4.6%, bringing its decline over the past two weeks to 21.5%, its worst two-week loss since the COVID-19 pandemic rocked markets in March. 2020.

First Republic Bank ended Friday down 32.8%, bringing its loss over the past 10 sessions to more than 80%. Moody’s downgraded the bank’s debt rating after the market closed.

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While support from some of the biggest names in US banks prevented First Republic from collapsing this week, investors were baffled at disclosing its cash position and how much emergency liquidity it needed.

SVB Financial Group has filed for bankruptcy for a court-supervised reorganization, days after regulators took over a 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.

Regulators are considering retaining ownership of the securities owned by Signature and SVB to allow smaller banks to participate in auctions for failed lenders, a source familiar with the matter said.

Reporting by Reuters offices. Written by Lincoln Feast. Edited by William Mallard

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