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Credit Suisse seeking to assure investors amid financial issues: FT

A Swiss flag flies over an indication of Credit Suisse in Bern, Switzerland

FABRICE COFFRINI | AFP | Getty Images

Credit Suisse executives are in talks with the financial institution’s main investors to reassure them amid rising issues over the Swiss lender’s financial well being, the Financial Times reported, citing individuals concerned within the discussions.

One govt concerned within the talks instructed the Financial Times that groups on the financial institution have been actively partaking with its prime purchasers and counterparties over the weekend, including that they have been receiving “messages of support” from prime investors.

Shares of Credit Suisse touched contemporary lows final week. The stock is down about 55% year-to-date.

Spreads of the financial institution’s credit score default swaps (CDS), which give investors with safety towards financial dangers resembling default, rose sharply Friday. They adopted reports the Swiss lender is looking to raise capital, citing a memo from its Chief Executive Ulrich Koerner.

FT stated the chief denied reports that the Swiss financial institution had formally approached its investors about presumably elevating extra capital, and insisted Credit Suisse “was trying to avoid such a move with its share price at record lows and higher borrowing costs due to rating downgrades.”

The financial institution instructed Reuters that it is within the technique of a technique evaluate that features potential divestitures and asset gross sales, and that an announcement is expected on Oct. 27, when the financial institution releases its third-quarter outcomes.

Credit Suisse has additionally been in talks with investors to increase capital with numerous eventualities in thoughts, Reuters stated, citing individuals accustomed to the matter as saying it consists of an opportunity that the financial institution might “largely” exit the U.S. market.

The newest from Credit Suisse alerts a “rocky period” forward but it surely may lead to a change within the U.S. Federal Reserve’s course, stated John Vail, chief world strategist at Nikko Asset Management, on CNBC’s “Squawk Box Asia” on Monday.

“The silver lining at end of this period is the fact that central banks will probably start to relent some time as both inflation is down and financial conditions worsen dramatically,” Vail stated. “I don’t think it’s the end of the world.”

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“We struggle to see something systemic,” analysts at Citi stated a report concerning the doable “contagion impact” on U.S. banks by “a large European bank.” The analysts didn’t identify Credit Suisse.

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

“We believe the U.S. bank stocks are very attractive here,” the report stated.

Read the full Financial Times report here.

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