The Treasury Department is actively reviewing the US financial sector’s exposure to Credit Suisse Group AG after the bank’s stock saw its biggest one-day drop on record, according to people familiar with the matter.
(Bloomberg) — The Treasury Department is actively reviewing the US financial sector’s exposure to Credit Suisse Group AG after the bank’s stock saw its biggest one-day drop on record, according to people familiar with the matter.
Officials at the Treasury Department are working closely with the Federal Reserve and European regulators, said one of the people, who spoke on condition of anonymity. Spokespersons for the Treasury Department and the Fed declined to comment.
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Credit Suisse is fighting to reassure investors after a top shareholder ruled out adding to its stake earlier on Wednesday, adding to market chaos that started with the collapse of regional banks in the US last week.
For global investors still on edge after the rapid-fire collapse of three regional US banks, the growing crisis at Credit Suisse has added to concerns about financial stability.
When turmoil crops up across the global financial system, Treasury typically reaches out to major banks to gather data that will inform their next steps. US regulators take a keen interest in the health of the biggest European banks because those lenders are on the other side of transactions worth billions of dollars with US financial institutions, raising the risk that American banks could be hurt by the tumult.
Earlier Wednesday a Treasury spokesperson said the agency was monitoring the Credit Suisse situation and was in touch with its global counterparts.
The Bank of England’s Prudential Regulation Authority, which supervises UK banks, is also engaging with Credit Suisse and overseas regulators on the situation, according to a person familiar with the matter.
Credit Suisse, which is in the middle of a complex three-year restructuring, has been struggling to contain deposit outflows. The cost of credit derivatives linked to the bank is blowing out to levels reminiscent of the financial panic of 2008.
The Zurich-based lender has asked the Swiss central bank for a public statement of support, according to a person familiar with the matter.
–With assistance from Kate Davidson and Hannah Levitt.
(Adds UK detail in third last paragraph.)
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