ABN Amro: Very early signs are that authorities have turned the tide

 

23m ago

09.50 GMT

https://www.theguardian.com/business/live/2023/mar/16/credit-suisse-borrowing-liquidity-swiss-francs-central-bank-ecb-lagarde-jeremy-hunt-business-live

 

ABN Amro: Very early signs are that authorities have turned the tide

There are “very early signs” that the measues taken by Swiss authorities to stabililise Credit Suisse are turning the tide, says ABN Amro’s head of bank research, Joost Beaumont.

 

Beaumont told clients this morning that the banking sector has been in the spotlight again in financial markets, following the failure of two US banks as well as concerns regarding Credit Suisse.

 

He adds:

 

• Credit Suisse issues are mainly related to credibility, as the bank looks solid from a fundamental point of view
• Very early signs are that the steps taken by Swiss authorities and this morning’s capital injection seem to have turned the tide
• We see Credit Suisse as a special case, which was also reflected by the fact that spreads of other banks’ bonds widened by less than Credit Suisse
• We also assess the extent to which European bank are exposed to the risks seen in the US
• We find that a relatively large part of deposits in Europe are covered by the Deposit Guarantee Scheme
• European banks also have lower investments as share of total assets, reducing
• risks of changes to asset valuations
• Overall, recent developments can be seen as a wake-up call for the sector, as it will not be immune for the sharp rise in policy rates
• We expect pressure on funding costs and larger differentiation between larger and smaller banks