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Monday, 23 October 2017

Credit Suisse quits as primary dealer for European government bonds

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(Reuters/IFR) - Credit Suisse said on Thursday it would give up its role as a primary dealer in all European government bond markets to help meet tougher Swiss financial regulations outlined a day earlier.

Acting as a primary dealer in government bonds is prestigious, allowing banks to take part in auctions and serving as an entree to more lucrative work in debt syndications.

But tougher regulation since the financial crisis has made it costlier for banks, due to the extra capital they now have to hold against possible losses.

Credit Suisse will continue to act as a primary dealer in US Treasuries, but the exit from European government bond markets is the first concrete example of the investment banking cuts that its chief executive had said would be needed.

Following the lead of regulators in the United States and Britain, Switzerland’s central bank has increased the amount of capital Credit Suisse and rival UBS must hold, to reduce the risk of taxpayers having to bail them out in a financial crisis.

On Thursday, Britain’s government debt issuance agency announced that Credit Suisse was resigning as a primary dealer in British government bonds, effective from the end of Friday.

A Credit Suisse spokesman subsequently said the company was also resigning all other European primary dealer roles, and would give up market-making activity too. No information on specific job losses was immediately available.

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