Credit Suisse sought to reassure clients in Brazil on Wednesday as its shares tumbled in Europe, noting that the bank’s capital structure remains robust and seeking to ward off comparisons to the US SVB, which US regulators shut down last week.
In a PowerPoint presentation in Portuguese, the second-largest Swiss bank cited the institution’s global indicators, such as 7.5 trillion reais of assets under management, with 3.1 billion reais of private assets under management at the end of last year.
The bank also said its capital structure remains resilient and compared metrics such as its core Tier 1 capital ratio (CET1) and short-term liquidity ratio (liquidity coverage ratio) against the capitalization of major peers across different countries .
“The capital position is even more solid”, highlighted the institution in the presentation.
Contacted by Reuters, Credit Suisse in Brazil said it had no comments on the matter.
Present in Brazil since 1959, Credit Suisse operates mainly in the sectors of private banking & wealth management and asset management, also carrying out credit transactions, issuing shares and bonds, IPOs, mergers and acquisitions of companies (M&A ), brokerage and treasury.
Its portfolio includes high-income clients, other than Banco Garantia (acquired in 1998) and Hedging-Griffo (acquired in 2007, with acquisition completed in 2012).
Shares of the bank plunged 24% in Europe on Wednesday, but this Thursday, following the announcement that Credit Suisse will accept a loan of up to $54 billion from the Swiss central bank, shares are up 23%. Such a deal has not occurred with a global bank since the 2008 international financial crisis.
Concern about Credit Suisse grew after its largest shareholder, Saudi National Bank, said it could not provide further financial assistance to the bank citing regulatory concerns. In 2008 the shares were worth around 80 Swiss francs and on Thursday they were priced at 2 francs.
LARGE CRISIS?
News about Credit Suisse, which is struggling to recover from a string of scandals in recent years, has rekindled fears of a wider threat to the financial system, especially after the collapse of three US banks in recent days, including the SVB .
In a joint statement with Swiss regulator Finma, the Swiss central bank said Credit Suisse is sound and that it “meets the capital and liquidity requirements imposed on systemically important banks.”
“We welcome the statement of support,” Credit Suisse said of the decision by the Swiss central bank and FINMA.
JP Morgan analysts said backing from Swiss authorities would give the bank time to complete its restructuring.
“The combination of measures should be sufficient to contain adverse moves in the capital structure as the market has assessed the potential impact of liquidity pressures,” JP Morgan said in a statement on Thursday.
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In the presentation sent to clients in Brazil on Wednesday, Credit Suisse also said that what happened at Silicon Valley Bank is not comparable to the bank, noting that the North American institution was facing problems managing its liabilities.
“Also, it’s worth noting that banks with assets under $250 billion have more lenient regulation in the US,” he said.
Silicon Valley Bank was shut down by regulators in the United States on Friday amid a sharp decline in startup deposits at the institution, on the back of a drought in venture capital funding amid high interest rates. US interests. The bank’s collapse triggered a coordinated response by the authorities to contain the effects on the system.
Credit Suisse also said deposits with the SVB grew faster than demand for assets and that the bank allocated excess cash to bonds, but the percentage of the allocation to longer-term securities (held-to-maturity ) turned out to be high.
“When the Fed raised interest rates, these bonds lost value, but those losses didn’t need to be carried forward…until the SVB tried to raise more capital and the market realized that the bank had virtually no CET1 ratio left…”, he added.
Source: Terra
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