At least four major banks, including Societe Generale SA and Deutsche Bank AG, have put restrictions on their trades involving Credit Suisse Group AG or its securities, according to five sources with direct knowledge of the matter.
Credit Suisse declined to comment. The bank has previously said that it is a strong, global bank. “We fulfill and basically overshoot all regulatory requirements. Our capital, our liquidity basis is very strong,” Chief Executive Ulrich Koerner said earlier this week in a media interview, a spokesperson previously told Reuters.
The cautious stance adopted by Credit Suisse’s rivals, details of which have not been reported before, comes after the Swiss central bank threw a lifeline to the lender after its shares were pummeled in the aftermath of the U.S. banking crisis this week. The curbs add to the bank’s problems as it tries to restructure operations and find its footing after a series of costly scandals.
These five people with direct knowledge of the matter requested anonymity because of the sensitivity of the situation.
Societe Generale has maintained existing counterparty positions with Credit Suisse, which it had cut back in recent weeks, but it is not increasing them, according to two sources with direct knowledge of the situation.
Societe Generale declined to comment.
Deutsche Bank, meanwhile, this week has slashed the lending value it assigns to Credit Suisse securities, such as bonds, put up by its wealth management clients as collateral for loans, according to a top executive at a European wealth manager that has business ties with the German lender. Earlier, the bank would value them at 70% to 80% of face value, the source said.
Deutsche Bank declined to comment.
HSBC Holdings Plc’s private banking business has also started scrutinizing its loans linked to Credit Suisse securities, which are in the hands of clients in Europe and Asia, a source with direct knowledge of the matter said. The source added that the bank has not taken any decision yet on lowering its exposure to the Swiss lender but was watching developments closely and will take a decision on this early next week.
HSBC did not have an immediate comment.
Another source at a major global bank, who deals directly with Credit Suisse in Asia, said their bank had started asking the Swiss lender to gross settle, a trading scenario where the counterparty demands upfront payment from Credit Suisse instead of collecting later any money the Swiss lender might owe them as a result of the trade.
Another global bank has reduced its unsecured exposure to Credit Suisse, which includes all lending with no collateral, according to a person with knowledge of the matter. The bank is still providing repurchase agreements, which is secured lending.
Credit Suisse said on Thursday it intended to borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank in what it called “decisive action” to boost its liquidity.
The planned move came after Swiss regulators pledged a liquidity lifeline to Credit Suisse in an unprecedented move by a central bank after the flagship Swiss lender’s shares fell by as much as 30% on Wednesday.
The lender told Reuters on Thursday that its average liquidity coverage ratio, a measure of how much cash-like assets the bank has, was 150% as of March 14.
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