Exclusive-Credit Suisse says key liquidity measure did not change the week SVB fell

By Selena Li and Elisa Martinuzzi

(Reuters) -Credit Suisse Group AG’s average liquidity coverage ratio, a measure of how much cash-like assets the bank has, did not change between March 8 and March 14, the Swiss lender said on Thursday, despite the global banking crisis. 

In a memo to staff with talking points for clients, dated March 16 and seen by Reuters, Credit Suisse wrote that CEO Ulrich Koerner’s comments on March 14 about the bank’s average liquidity coverage ratio having improved to approximately 150% referred to a reading of the measure from March 8.

The bank said in an earlier press release on March 16 that the 150% LCR value was as of March 14.

In a statement to Reuters, the bank said that all the data “presented in documents for our clients, colleagues and other stakeholders is correct”, adding that the average LCR ratio was accurate on March 8 and accurate on March 14.

Following a crisis of confidence that wiped 25% off the value of Credit Suisse shares on Wednesday, the bank sought an emergency liquidity line from the Swiss National Bank in the first such move for a global lender since the financial crisis of 2008.

Over recent months, analysts and investors have been poring over the precise details of how much cash the bank has on hand at a given time to gauge its ability to meet regulatory requirements.

The bank has said it had dropped below some regulatory thresholds in the fourth quarter because of outflows that it hasn’t since been able to reverse.

The failure of Silicon Valley Bank in the United States on March 10 triggered a worldwide plunge in banking stocks and prompted depositors to shift their cash to larger lenders that are perceived to be sounder.

The unprecedented pace of outflows at SVB on March 9 — more than $40 billion in a day — has put the spotlight on banks’ liquidity measures, which have now been seen to change dramatically in the space of hours.

Credit Suisse for months has been battling to regain the trust of clients and investors after a series of scandals and losses in recent years.

In the autumn, an unsubstantiated rumour about its financial health on social media triggered a run that saw clients pull more than $100 billion in assets from the bank over several months.

Remarks by its largest investor on Wednesday that it would not be able to increase its stake in the bank if needed because of regulatory constraints sparked a deep selloff in its shares and bonds, creating a crisis of confidence.

By tapping the central bank for funds, the bank will be adding to liquidity if needed.

In the memo to staff seen by Reuters, the bank also said the backstop from the central bank does not trigger a “viability event.”

A firm is viable when it generates sufficient income to stay in business and meets its obligations including payments and debt commitments.

(Additional reporting by Noele Illien, Oliver Hirt and Stefania Spezzati; Editing by Paritosh Bansal, Edward Tobin and Anna Driver)

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