Credit Suisse Group AG’s dramatic rescue is a lesson that even well-capitalized banks can lose the trust of the market, according to a senior Japanese regulatory official.
(Bloomberg) — Credit Suisse Group AG’s dramatic rescue is a lesson that even well-capitalized banks can lose the trust of the market, according to a senior Japanese regulatory official.
“Credit Suisse had such a high capital adequacy ratio and yet, the market gave up on it judging it had a weak business model,” Tomoko Amaya, the Financial Services Agency’s vice-minister for international affairs, said in an interview. It is “an important lesson” that having a lot of capital isn’t enough to reassure the market, she said.
The Swiss lender succumbed to a crisis of confidence about a month ago, prompting the country’s authorities to step in to broker its sale to larger rival UBS Group AG. Earlier, troubles at Silicon Valley Bank and its subsequent collapse had driven investor attention to the heavy investment in US bonds by Japan’s lenders, putting their shares under pressure.
Read more: How Scandal and Mistrust Ended Credit Suisse’s 166-Year Run (1)
Amaya said that the FSA, Japan’s financial regulator, is following up on how brokerages sold 140 billion yen ($1 billion) worth of risky debt issued by Credit Suisse known as Additional Tier 1 notes.
Read more: MUFG Clients Lost $700 Million in Credit Suisse AT1 Wipeout (1)
“We have already identified the sales by Japanese brokerage firms to Japanese investors including retail investors,” she said earlier Monday in an interview with Bloomberg Television. “So we are following up on how these securities firms and brokerage firms were dealing with the customers, how they sold the AT1 bonds,” she said.
–With assistance from Russell Ward.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.