Credit Suisse default swaps hit record as SVB default hits banks

(Bloomberg) — The cost of insuring Credit Suisse Group AG’s bonds against default rose to its highest level on record as the collapse of Silicon Valley Bank sparked concerns of broader contagion in the banking industry.

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

European bank and insurance stocks plummeted on Monday, with Credit Suisse shares falling as much as 15% to a new record low. Even before the turbulence caused by SVB’s demise, investors were worried about Credit Suisse’s ability to craft a restructuring plan that would further refocus it on private lending, spin off large parts of its investment banking business, and cut costs by cutting 9,000 jobs lowers .

Earlier this month, Credit Suisse said it was delaying the release of its annual report following a last-minute request from US regulators about previous financial statements.

The bank is also struggling with cross-departmental departures. At least a dozen private bankers at C-suite level and above have left or are planning to leave in Singapore and Hong Kong since September. That has further complicated asset recovery efforts and put pressure on wealth chief Francesco De Ferrari, who joined just over a year ago.

–With the support of Marion Halftermeyer.

(Adds context from fourth paragraph, updates data throughout.)

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