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.



Saudi Arabia Begins Marketing International Bonds Following 2025 Borrowing Plan Announcement

Riyadh (Reuters)
Riyadh (Reuters)
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Saudi Arabia Begins Marketing International Bonds Following 2025 Borrowing Plan Announcement

Riyadh (Reuters)
Riyadh (Reuters)

Saudi Arabia has entered global debt markets with a planned sale of bonds in three tranches, aiming to use the proceeds to cover budget deficits and repay outstanding debt, according to IFR (International Financing Review).

The indicative pricing for the three-year bonds is set at 120 basis points above US Treasury bonds, while the six- and ten-year bonds are priced at 130 and 140 basis points above US Treasuries, respectively, as reported by Reuters.

The bonds, expected to be of benchmark size (typically at least $500 million), come a day after Saudi Arabia unveiled its 2025 borrowing plan. The Kingdom’s financing needs for the year are estimated at SAR 139 billion ($37 billion), with SAR 101 billion ($26.8 billion) allocated to cover the budget deficit and the remainder to service existing debt.

The National Debt Management Center (NDMC) announced that Finance Minister Mohammed Al-Jadaan had approved the 2025 borrowing plan following its endorsement by the NDMC Board. The plan highlights public debt developments for 2024, domestic debt market initiatives, and the 2025 financing roadmap, including the Kingdom’s issuance calendar for local sukuk denominated in Saudi Riyals.

The NDMC emphasized that Saudi Arabia aims to enhance sustainable access to debt markets and broaden its investor base. For 2025, the Kingdom will continue diversifying its domestic and international financing channels to meet funding needs efficiently. Plans include issuing sovereign debt instruments at fair prices under risk management frameworks and pursuing specialized financing opportunities to support economic growth, such as export credit agency-backed funding, infrastructure development financing, and exploring new markets and currencies.

Recently, Saudi Arabia secured a $2.5 billion Sharia-compliant revolving credit facility for three years from three regional and international financial institutions to address budgetary needs.

In 2024, Saudi Arabia issued $17 billion in dollar-denominated bonds, including $12 billion in January and $5 billion in sukuk in May. Rating agencies have recognized the Kingdom’s financial stability. In November, Moody’s upgraded Saudi Arabia’s rating to “AA3,” while Fitch assigned an “A+” rating, both with stable outlooks. S&P Global rated the Kingdom at “A/A-1” with a positive outlook, reflecting its low credit risk and strong capacity to meet financial obligations.

The International Monetary Fund (IMF) estimated Saudi Arabia’s public debt-to-GDP ratio at 26.2% for 2024, describing it as low and sustainable. The IMF projects this ratio to reach 35% by 2029, with foreign borrowing playing a significant role in financing fiscal deficits.