Credit Suisse seeks to reassure investors amid financial worries: FT

Credit Suisse executives are in talks with its major investors to reassure them amid growing concerns about the Swiss bank’s financial health, the Financial Times reported, citing people involved in the discussions.

An executive involved in the talks told the Financial Times that the bank’s teams were actively engaging with its top clients and counterparties over the weekend, adding that they were receiving “messages of support” from top investors.

Credit Suisse shares hit new lows last week. The stock is down about 55% year-to-date.

Spreads on the bank’s credit default swaps (CDS), which provide investors with protection against financial risks such as default, rose sharply on Friday. It followed reports that the Swiss lender is looking to raise capital, citing a memo from chief executive Ulrich Koerner.

The FT reported that the executive denied reports that the Swiss lender had formally approached its investors about potentially raising more capital and insisted that Credit Suisse was “trying to avoid such a move with its share price at record lows and higher costs lending due to rating downgrade”.

The bank told Reuters it was in the process of reviewing its strategy, which includes potential divestments and asset sales, and that an announcement was expected on Oct. 27, when the bank will publish third-quarter results.

Credit Suisse is also in talks with investors to raise capital with various scenarios in mind, Reuters reported, citing people familiar with the matter as including a possibility that the bank could exit the US market “largely”.

The latest from Credit Suisse signals a “difficult period” ahead, but could lead to a change in the Fed’s direction, John Vail, chief global strategist at Nikko Asset Management, told his “Squawk Box Asia” CNBC on Monday.

“The silver lining at the end of this period is the fact that central banks will likely begin to ease for some time as both inflation has fallen and financial conditions have worsened dramatically,” Weil said. “I don’t think it’s the end of the world.”

“We struggle to see anything systemic,” Citi analysts said in a report on the potential “contagion effect” on US banks from “a major European bank”. The analysts did not name Credit Suisse.

“We understand the nature of the concerns, but the current situation is night and day since 2007 as the balance sheets are fundamentally different in terms of capital and liquidity,” the report said, referring to the financial crisis that unfolded in 2007.

“We think US bank stocks are very attractive here,” the report said.

Read the full Financial Times report here.