Credit Suisse Meets to Weigh Options, under Pressure to Merge with UBS

A logo is seen on the headquarters of Swiss bank Credit Suisse on Paradeplatz in Zurich, Switzerland March 16, 2023. REUTERS/Denis Balibouse
A logo is seen on the headquarters of Swiss bank Credit Suisse on Paradeplatz in Zurich, Switzerland March 16, 2023. REUTERS/Denis Balibouse
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Credit Suisse Meets to Weigh Options, under Pressure to Merge with UBS

A logo is seen on the headquarters of Swiss bank Credit Suisse on Paradeplatz in Zurich, Switzerland March 16, 2023. REUTERS/Denis Balibouse
A logo is seen on the headquarters of Swiss bank Credit Suisse on Paradeplatz in Zurich, Switzerland March 16, 2023. REUTERS/Denis Balibouse

Credit Suisse Group AG began a make-or-break weekend after some rivals grew cautious in their dealings with the bank as regulators urged it to pursue a deal with Swiss rival UBS AG.

Credit Suisse Chief Financial Officer Dixit Joshi and his teams will hold meetings over the weekend to assess strategic scenarios for the bank, people with knowledge of the matter said on Friday.

The 167-year-old bank is the biggest name ensnared in market turmoil unleashed by 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 funding, Reuters said.

Swiss regulators are encouraging UBS and Credit Suisse to merge but neither bank wanted to do so, one source said. The regulators do not have the power to force the merger, the person said.

The boards of UBS and Credit Suisse were expected to separately meet over the weekend, the Financial Times said, Credit Suisse shares jumped 9% in after-market trading following the FT 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 and Deutsche Bank AG, have put restrictions on their trades involving Credit Suisse or its securities, five people with direct knowledge 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.

Efforts to shore up Credit Suisse come as policymakers including the European Central Bank and US President Joe Biden sought to reassure investors and depositors the global banking system is safe. But fears of broader troubles in the sector persist.

Already this week, big US banks provided a $30 billion lifeline for smaller lender First Republic, while US banks altogether sought a record $153 billion in emergency liquidity from the Federal Reserve in recent days.

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 US banking system to negative.

In Washington, focus turned to greater oversight to ensure that banks - and their executives - are held accountable.

Biden called on Congress to give regulators greater power over the banking sector, including imposing higher fines, clawing back funds and barring officials from failed banks.

Some Democratic lawmakers asked regulators and the Justice Department to probe the role of Goldman Sachs in SVB's collapse, said the office of Representative Adam Schiff.

MARKET TROUBLES LINGER
Banking stocks globally have been battered since Silicon Valley Bank collapsed, raising questions about other weaknesses in the financial system.

US regional bank shares fell sharply on Friday and the S&P Banks index tumbled 4.6%, bringing its decline over the past two weeks to 21.5%, its worst two-week calendar loss since the COVID-19 pandemic shook markets in March 2020.

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

While support from some of the biggest names in US banking prevented First Republic's collapse this week, investors were startled by disclosures on its cash position and how much emergency liquidity it needed.

SVB Financial Group filed for bankruptcy court-supervised reorganization, days after regulators took over its Silicon Valley Bank unit.

Regulators had asked banks interested in buying SVB and Signature Bank to submit bids by Friday, people familiar with the matter said.

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



Oil Climbs $1 as Price Drop Triggers Buying; Oversupply Worries Weigh

FILE PHOTO: An oil pumpjack operates near Williston, North Dakota January 23, 2015. REUTERS/Andrew Cullen/File Photo
FILE PHOTO: An oil pumpjack operates near Williston, North Dakota January 23, 2015. REUTERS/Andrew Cullen/File Photo
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Oil Climbs $1 as Price Drop Triggers Buying; Oversupply Worries Weigh

FILE PHOTO: An oil pumpjack operates near Williston, North Dakota January 23, 2015. REUTERS/Andrew Cullen/File Photo
FILE PHOTO: An oil pumpjack operates near Williston, North Dakota January 23, 2015. REUTERS/Andrew Cullen/File Photo

Oil gained more than $1 per barrel on Tuesday, rebounding on technical factors and bargain hunting after a decision by OPEC+ to boost output sent prices down the previous session, although concerns about the market surplus outlook persisted.

Brent crude futures rose $1.15 to $61.38 a barrel by 0623 GMT, the first time gain after six consecutive declines, while US West Texas Intermediate crude added $1.11 to $58.24 a barrel.

Both benchmarks had settled at their lowest since February 2021 on Monday, driven by an OPEC+ decision over the weekend to further speed up oil production hikes for a second consecutive month.

"Today’s slight rebound in oil prices appears more technical than fundamental," said Yeap Jun Rong, a market strategist at IG. "Persistent headwinds including a pivotal shift in OPEC+ production strategy, uncertain demand amid US tariff risks, and price forecast downgrades are continuing to weigh on the broader price movement."

Driven by expectations that production will exceed consumption, oil has lost over 10% in six straight sessions and dipped over 20% since April when US President Donald Trump's tariff shocks prompted increased bets on a slowdown in the global economy.

The return of Chinese market participants after a five-day public holiday since May 1 was seen supporting prices on Tuesday.

"China also reopened today, and being the largest importer, buyers would have likely jumped to secure oil at current low levels," said Priyanka Sachdeva, senior market analyst at Phillip Nova.

Also lending some support was data showing a pick-up in services sector's growth in the US, the world's major oil consumer, as orders increased.

The Institute for Supply Management (ISM) said on Monday its nonmanufacturing purchasing managers index (PMI) increased to 51.6 last month from 50.8 in March. Economists polled by Reuters had forecast the services PMI dipping to 50.2.

The US Federal Reserve will likely leave interest rates unchanged on Wednesday as tariffs roil the economic outlook.

Barclays lowered its Brent crude forecast on Monday by $4 to $70 a barrel for 2025 and set its 2026 estimate at $62 a barrel, citing "a rocky road ahead for fundamentals" amid escalating trade tensions and OPEC+'s pivot in its production strategy.

Goldman Sachs also lowered its oil price forecast on Monday by $2-3 per barrel, as they now expect another 400,000 barrels per day production increase by OPEC+ in July.