Central Bankers Unite

March 20, 2023 | James Torgerson, Senior Research Analyst, David Hernandez, CFA, Director of Traditional Manager Search

This chart description is for illustrative purposes only and its accuracy cannot be guaranteed. Please see full disclosures at end of PDF document in the web post. General description: Two-line chart comparing Credit Suisse performance to the MSCI ACWI Financials benchmark. Chart subtitle: Credit Suisse’s stock is down more than 70% year-to-date after a volatile few years ended with a discounted sale to UBS. Chart source: Source: Bloomberg as of March 20, 2023. Chart visual description: Left y-axis is labeled Cumulative Return and ranges from -100% to +20%. X-axis shows dates in two-month increments, with labels beginning with Dec-19 and up to Feb-23. Credit Suisse Group AG line is light teal and MSCI ACWI Financials line is grey. Chart data description: Credit Suisse largely followed the Financials benchmark up to February 2021 for the period shown. However, since then, CS has had several steep drops besides a steady decline. As of March 17, CS is down -85% from December 2019, while the benchmark is up 2%. End chart description. See disclosures at end of document.

Over the weekend it was announced that UBS will buy beleaguered Credit Suisse for $3.2 billion after a drastic plunge in Credit Suisse’s share price. The terms of the deal will see Credit Suisse shareholders receive 1 UBS share for every 22.48 Credit Suisse shares held. The Swiss National Bank has pledged a loan of up to 100 billion Swiss francs ($108 billion) to support the takeover and shore up any liquidity and the Swiss government announced that it would provide more than 9 billion francs to backstop some of the losses that UBS may incur as a result of the merger. Until the completion of the deal, expected by the end of 2023, Credit Suisse and UBS will operate as separate businesses and are conducting business as usual.

The shotgun deal, which follows turmoil in the U.S. banking system over the last few weeks, was brokered by Swiss authorities to prevent serious damage to the Swiss and international financial markets. Banking concerns have pushed global central bank authorities to coordinate a response to maintain sufficient liquidity in the global financial system. The U.S. Federal Reserve, Bank of Canada, Bank of England, European Central Bank, and Swiss National Bank have agreed to use standing U.S. dollar swap line arrangements to enhance liquidity. Separately, on March 22, the U.S. central bank will announce its next policy decision. Markets will be closely watching not only the action taken but Chairman Powell’s comments on the strength of the U.S. economy and global financial system given the recent banking turmoil.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

James Torgerson
Senior Research Analyst

Get to Know James

David Hernandez, CFA
Director of Traditional Manager Search

Get to Know David

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

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