Credit Suisse opened for business as usual in Hong Kong on Monday, after being taken over by its Swiss rival UBS in a US$3.25 billion weekend buyout brokered by the Swiss central bank to prevent a spillover of its crisis to the global banking system.
Credit Suisse has a single branch location in Hong Kong, operating under two licenses to offer a wide range of financial services in equity, bonds, derivatives and wealth management, with HK$100 billion (US$12.74 billion) of assets under management.
“All of them will open for business today as usual; customers can continue to access their deposits with the branch and trading services provided by Credit Suisse for Hong Kong’s stock and derivatives markets,” the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) said in separate statements before offices opened on Monday. “The HKMA and the SFC will stay in close touch with the Swiss authorities, and will monitor the financial markets very closely.”
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The joint statements sought to assure financial markets that the takeover of the 167-year-old Credit Suisse by its bigger rival – hot on the heels of the collapse of several midsize US banks in the last fortnight – would not trigger the kind of worldwide panic that led to the 2008 Global Financial Crisis.
UBS Group’s Chairman Colm Kelleher (right) and Credit Suisse’s Chairman Axel Lehmann (left) at a press conference after UBS’ US$3.25 billion takeover of Credit Suisse in Bern, Switzerland on March 19, 2023. Photo: Reuters. alt=UBS Group’s Chairman Colm Kelleher (right) and Credit Suisse’s Chairman Axel Lehmann (left) at a press conference after UBS’ US$3.25 billion takeover of Credit Suisse in Bern, Switzerland on March 19, 2023. Photo: Reuters.>
Asia’s financial markets appeared to receive the takeover in stride. Hong Kong’s benchmark Hang Seng Index opened 0.8 per cent lower, while the key indexes in Shanghai and Shenzhen rose 0.1 per cent at their open.
The Swiss National Bank (SNB) worked through the weekend to find a solution to rescue Credit Suisse, which was pummelled in the stock market, as hedge funds and panic investors sought out the next vulnerable bank to fall after the demise of four midsize American lenders. Credit Suisse’s shares tumbled 25.5 per cent last week to close at 1.86 Swiss francs, valuing Switzerland’s second-largest bank at just over US$8.7 billion.
The Hong Kong assets held by Credit Suisse amounted to 0.5 per cent of the total held in the city’s banking sector, an “insignificant” exposure that would not undermine the resilience and “strong capital and liquidity positions” of the industry, the HKMA said.
Credit Suisse would still proceed with its 2023 Asia Investment Conference, scheduled to take place in Hong Kong from Tuesday through Thursday, a spokeswoman said. Chairman Axel Lehmann, chief executive Ulrich Koerner and Asia-Pacific chief executive Edwin Low have postponed their trips to deal with the takeover.
Credit Suisse was the 9th-largest issuer of structured financial products in Hong Kong as at the end of February, representing 4 per cent of the market value of all outstanding units in the market, according to the HKMA.
With additional reporting by Li Jiaxing in Hong Kong.
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