Credit Suisse Default Swaps Hit Record as SVB Failure Hits Banks

(Bloomberg) — The cost of insuring the bonds of Credit Suisse Group AG against default climbed to the highest on record as the collapse of Silicon Valley Bank sparked concern about broader contagion in the banking industry.

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Five-year credit default swaps for the Zurich-based lender jumped as much as 36 basis points on Monday to 453 basis points, according to pricing source CMAQ. They widened the most in a Bloomberg index that tracks the CDS of 125 European high-grade companies.

Shares of European banks and insurers slumped on Monday and Credit Suisse’s stock tumbled as much as 15% to a fresh record low. Even before the turbulence caused by SVB’s demise, investors were worried about Credit Suisse’s ability to put in a place a restructuring plan that will pivot it further to private lending, hive off large parts of the investment banking business, and reduce costs by cutting 9,000 jobs.

Earlier this month, Credit Suisse said it was delaying publication of its annual report following a last-minute query by US regulators over previous financial statements.

The bank is also grappling with departures across departments. At least a dozen private bankers at the managing director-level and above have left in Singapore and Hong Kong since September, or are planning to leave. That has further complicated efforts to win back assets and raised pressure on wealth head Francesco De Ferrari, who joined just over a year ago.

–With assistance from Marion Halftermeyer, Tasos Vossos and Paul Cohen.

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