Credit Suisse More Important To Indian Banking Sector Than SVB: Jefferies

Credit Suisse owns more than Rs 200 billion ($2.4 billion) of assets in India, making it the 12th largest overseas lander, according to Jefferies India

Credit Suisse announced that it was offering to buy back up to 3 billion francs ($3.23 billion) of debt securities in a move that may help to restore market confidence.

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After a slump in Credit Suisse shares which intensified apprehensions about a global financial crisis, Jefferies India in a note said that Credit Suisse Group AG is of greater importance to the Indian banking sector compared to Silicon Valley Bank (SVB), reported Bloomberg. 

Jefferies’ analyst Prakhar Sharma said, "Given the relevance of Credit Suisse to India's banking sector, we see softer adjustments in assessment of counter-party risks, especially in the derivative market." According to the report, Jefferies wrote that the Switzerland-based group, "has a major presence in India’s derivatives market."

According to the note, foreign banks in India have 4 per cent to 6 per cent of assets, but a large 50 per cent share of off-balance sheet liabilities. Credit Suisse alone owns more than Rs 200 billion ($2.4 billion) of assets in India, making it the 12th largest overseas lander. 

Jefferies note added that loans form 73 per cent of  Credit Suisse's total liabilities in the country, with the majority of them of short tenure, the report said.  Sharma said he is looking for any liquidity issues or counter-party risks that may result from the fallout. He also expects the RBI to watch for liquidity issues and counter-party exposure, and intervene as necessary. 

Credit Suisse announced that it was offering to buy back up to 3 billion francs ($3.23 billion) of debt securities in a move that may help to restore market confidence. Chief Executive Officer (CEO) Ulrich Koerner has said the bank's financial position is sound.

On Thursday, the global investment bank announced it would borrow up to $54 billion from the Swiss central bank to shore up its liquidity and investor confidence.

The Swiss bank's announcement helped stem heavy selling in financial markets in Asian morning trade on Thursday, following torrid sessions in Europe and the United States overnight as investors were worried about a run on global bank deposits.