Will Credit Suisse be next?
- Major shareholders of Credit Suisse, Saudi National Bank, said that they do not want to increase the shareholding over 10% for concerning about EU regulation, triggering fears that Credit Suisse could face difficulty on top of previous bad reputation on rumors, losses and breaking regulations, causing fund withdrawal and equity sell off while bond holdings rushed to buy credit default swap (CDS) similar to an insurance against default
- Market panic was calm down once Swiss National Bank (SNB) injected CHF50bn as liquidity to Credit Suisse while investors are keening to see speedy adjustment on asset sales, especially from Investment Banking side, and capital injections from elsewhere; note that Credit Suisse is one of Global Systemically Important Financial Institution (SIFI) which the fail of these banks could trigger financial crisis; thus these banks would require higher capital than others
- Impacts on capital market in ASEAN are limited to capital movement and market sentiment towards bond and equity markets while investors are keeping an eye on monetary policy from the Fed and ECB whether they would slow the pace of rate hikes in the light of this financial turmoil; we viewed that the ECB and the Fed would continue hiking the rate to curb rising inflationary pressure, but they may not hike as aggressively as they did in the past for fear of causing concerns on financial market conditions
Dr. Amonthep Chawla
Executive Vice President, Head, Research Office and Head, Wealth Research & Advisory , CIMB THAI Bank
