Research Market strategy
By Swissquote Analysts
Morning News

Credit Suisse Bond Wipeout Threatens $250 Billion Market

Credit Suisse Group AG's emergency merger with UBS Group AG will wipe out the bank's riskiest bonds, rattling investors in the quarter-trillion-dollar market for similar bank debt. About 16 billion Swiss francs, or about $17.3 billion, of the bank's additional tier 1 bonds will be completely written down, Switzerland's financial regulator, Finma, said in a Sunday statement. Credit Suisse also said it was informed by Finma that the bonds would be "written off to zero." European and Asian AT1s fell Monday with one of the bonds issued by HSBC Holdings PLC dropping 8% to 88 cents on the dollar in heavy trading. A roughly $1 billion AT1 exchange-traded fund from Invesco dropped 8.7%, while a similar ETF from WisdomTree slid 6.3% in recent trading.

By
Mathieu VILLARD
Morning News

UBS Agrees to Buy Credit Suisse for More Than $3 Billion

UBS Group AG agreed to take over its longtime rival Credit Suisse Group AG for more than $3 billion, pushed into the biggest banking deal in years by regulators eager to halt a dangerous decline in confidence in the global banking system. The deal between the twin pillars of Swiss finance is the first megamerger of systemically important global banks since the 2008 financial crisis when institutions across the banking landscape were carved up and matched with rivals, often at the behest of regulators. The Swiss government said it would provide more than $9 billion to backstop some losses that UBS may incur by taking over Credit Suisse.

By
Mathieu VILLARD
Morning News

ECB Defies Mounting Banking Strains with Half-Point Rate Rise

The European Central Bank raised interest rates by a half percentage point, pressing ahead with its fight against inflation despite concerns that this could exacerbate strains in the financial system. The ECB said in a statement that it would increase its key rate to 3%, the highest level since 2008, while promising to provide liquidity support to the financial system if needed. The move follows consecutive half-point rate increases in February and December.

By
David VERELST
Morning News

Credit Suisse Will Borrow Up to $53.7 Billion

Credit Suisse Group, the Swiss bank whose shares tumbled Wednesday as fears about the health of global banks jumped the Atlantic Ocean, said it would exercise its option to raise as much as 50 billion Swiss francs, equivalent to $53.7 billion, from the Swiss National Bank in a bid to stanch liquidity concerns. The firm, based in Zurich, called the decision a “decisive action to pre-emptively strengthen its liquidity.” Credit Suisse added that the move “would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs.”

By
Nadine PEREIRA
Morning News

Credit Suisse Weaknesses in Internal Controls Carries Negative Governance Implications

On Tuesday, Credit Suisse dropped by almost 0.8 per cent. The major bank had admitted to considerable weaknesses in financial reporting over the past two years and at the same time confirmed that the outflow of funds was continuing. Here, the major shareholders from the oil states could intervene in a stabilising manner, traders commented. Credit Suisse published its annual report on Tuesday, which had been postponed. The report reveals pay cuts for the top managers of the ailing bank after the miserable financial year 2022, but they will receive financial incentives for a successful restructuring of the bank. According to the remuneration report, CS will pay its management a total of CHF 32.2 million in compensation for the heavily loss-making financial year 2022, compared to CHF 38.1 million for the previous year.

By
Mathieu VILLARD
Morning News

HSBC to Buy Silicon Valley Bank's U.K. Arm

HSBC (-4.1% in London) announced the acquisition of Silicon Valley Bank UK (SVB UK), the UK subsidiary of the bankrupt US Silicon Valey Bank, for £1. HSBC and the UK Treasury stated that all funds deposited with SVB UK were safe and that all operations would continue as normal. The UK banking giant indicated that the acquisition would enable it to strengthen its presence in the UK. As of 10 March, SVB UK had loans of around £5.5 billion (€6.22 billion) and deposits of around £6.7 billion, while equity capital is expected to be around £1.4 billion. The acquisition was completed with immediate effect.

By
Mathieu VILLARD
Morning News

Federal Reserve Rolls Out Emergency Measures to Prevent Banking Crisis

U.S. regulators took control of a second bank Sunday and announced emergency measures to ease fears depositors might pull their money from smaller lenders after the swift collapse late last week of Silicon Valley Bank. The measures, which include guaranteeing all deposits of SVB, were designed to shore up wavering confidence in the banking system. They were jointly announced Sunday night by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. Regulators announced they had taken control of Signature Bank, one of the main banks for cryptocurrency companies, on Sunday. The New York bank’s depositors will be made whole, officials said. A senior Treasury official said the steps didn’t constitute a bailout because stock and bondholders in SVB and Signature wouldn’t be protected. The Fed and Treasury separately said they would use emergency-lending authorities to make more funds available to meet demands for bank withdrawals, an additional effort to prevent runs on other banks.

By
Mathieu VILLARD
Morning News

Oracle Stock Falls Following Forecast as Revenue Disappoints

Oracle Corp. shares recouped some of their losses in the extended session Thursday after the forecast revenue range bookended the Wall Street consensus, as the software company’s largest business unit topped forecasts, but its others didn’t. Oracle ORCL shares were down about 3.5% after hours following the forecast. Prior to the forecast, shares had dropped more than 5% and were around those levels when a conference call with analysts began. Oracle shares declined 1.8% in the regular session to close at $86.87. On the call with analysts, Oracle Chief Executive Safra Catz forecast fourth-quarter earnings of $1.56 to $1.60 a share on revenue growth of 15% to 17%, or $13.62 billion to $13.85 billion.

By
Nadine PEREIRA
Morning News

Credit Suisse to Delay Publication of 2022 Annual Report on SEC Comments

Credit Suisse Group AG said Thursday that it will delay the publication of its 2022 report after a late call from U.S. market regulators over 2019 and 2020 cash-flow statements, adding a further headache as the lender attempts to woo back clients amid a costly turnaround effort. The Swiss bank said it received a call from the U.S. Securities and Exchange Commission on Wednesday in relation to certain open SEC comments about the technical assessment of previously disclosed revisions to its consolidated cash-flow statements in the 2020 and 2019 fiscal years as well as related controls.

By
Mathieu VILLARD
Morning News

Geberit increases Dividend for 2022 despite Decline in Profit

Sanitary technology group Geberit generated lower profits in fiscal year 2022 than in the previous year due to high raw material and energy prices. The dividend is nevertheless to be increased slightly. Operating profit (EBITDA) decreased by 15.0 percent to 909 million Swiss francs, falling short of the previous year's record result. The corresponding margin fell sharply by 4.1 percentage points to 26.8 percent. The main reasons for this decline were the massive increase in costs and the currency development, as the company announced on Wednesday. This had a significant negative impact on results at all levels.

By
Nadine PEREIRA