Friday, March 31, 2023

Suisse owns Rs 20,000 cr assets in India

Beleaguered Swiss bank Credit Suisse is one of the top 15 foreign banks in India and owns assets worth more than Rs 20,000 crore, as per a note by Jefferies.
As per the financial service provider Jefferies, 70 per cent of Credit Suisse’s assets are held in the form of government securities. Moreover, its off-balance sheet items are seven times its total assets, Business Today reported. The note read, “Alike foreign banks, their off-balance sheet is seven times the total assets, and they are the 14th largest foreign bank in the system.”
The Switzerland-based banking giant also has a significant presence in the derivatives market and funds 60 per cent of its assets from borrowings, of which 96 per cent has a tenure of up to two months, according to Jefferies.
The note also highlighted that Credit Suisse is more relevant to the Indian financial system than the Silicon Valley Bank, which collapsed recently. They stressed that the Reserve Bank of India (RBI) would intervene if things go south and keep a close watch on the developing situation.
“We expect RBI to keep a close watch on liquidity issues, and counterparty exposures and intervene as necessary. This may also lead to institutional deposits moving more towards larger/ quality banks,” said Jefferies.
The Jefferies note also added, “Borrowings in India form 73 per cent of total liabilities and 96 per cent of borrowings have tenure of up to 2 months. Deposit base is smaller at Rs 28 billion, forming 20 per cent of total liabilities and 70 per cent are from subsidiaries. While the share of shorter-term liabilities is high, assets are mostly in liquid G-Secs.”
It is worth noting that foreign banks have a limited presence in India. Out of the total, they have a 6 per cent share in total assets, 4 per cent in loans and 5 per cent in deposits. Despite their limited presence, they are active in the derivative markets (forex and interest rates) where they have up to 50 per cent share.
The shares of Credit Suisse crashed on Wednesday after Saudi National Bank, its main shareholder, said that it would not invest any more money in the Swiss bank. On top of that, its annual report cited “material weaknesses” in internal control.


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