Credit Suisse plans to conduct meeting as it faces pressure from regulators to merge with UBS

After the recent share slump of Credit Suisse which created panic in the market about the banking crisis, the bank's Chief Financial Officer Dixit Joshi said that he and his teams will hold meetings over the weekend to assess strategic scenarios for the bank, Reuters reported.

This comes as Swiss regulators are urging UBS to merge with Credit Suisse but none of the banks are ready to do the same and the regulators are not authorised to force the merger.

The boards of UBS and Credit Suisse were due to meet separately over the weekend, according to the Financial Times.

The 167-year-old bank found itself in big trouble after a string of scandals over many years, top management changes, multi-billion-dollar losses and an uninspiring strategy. This move marked the first time a major global bank had resorted to emergency measures since the 2008 financial crisis, amid concerns of contagion in the banking industry and uncertainty surrounding the ability of central banks to maintain their aggressive rate hikes aimed at curbing inflation.

Besides that, the sudden collapse of the Silicon Valley Bank and Signature Bank also rocked the global banking scenario.

At least four large banks, including Societe Generale SA and Deutsche Bank AG, have placed limits on their dealings involving Credit Suisse or its securities, people aware of the matter told Reuters.

“The Swiss central bank stepping in was a necessary step to calm the flames, but it might not be sufficient to restore confidence in Credit Suisse, so there’s talk about more measures,” said Frederique Carrier, head of investment strategy at RBC Wealth Management.

As policymakers, notably the European Central Bank and U.S. President Joe Biden, worked to reassure investors and depositors that the global banking system is secure, efforts were made to support Credit Suisse. Nonetheless, worries about deeper issues in the industry continue.

Large US banks including JPMorgan Chase, Citigroup, Bank of America Corp, Wells Fargo, Goldman Sachs and Morgan Stanley injected $30 billion in deposits into First Republic Bank, rescuing the lender caught up in a widening crisis triggered by the collapse of two other mid-size US lenders over the past week.

This reflected “funding and liquidity strains on banks, driven by weakening depositor confidence,” said ratings agency Moody’s, which this week downgraded its outlook on the U.S. banking system to negative.

Banks stocks throughout the world have taken a beating since Silicon Valley Bank went bankrupt, increasing concerns about broader flaws in the financial system.

US regional bank shares plummeted dramatically on Friday, with the S&P Banks index down 4.6%, pushing its two-week decline to 21.5%, the largest two-week calendar loss since the COVID-19 epidemic rattled markets in March 2020.

Also Read: JPMorgan, Citi, Goldman Sachs, others inject $30 billion to rescue First Republic Bank

Also Read: What happened at Credit Suisse and how did it reach crisis point?