Saturday 10 December 2016

Credit Suisse offloads Irish bonds as it cuts exposure to 'peripheral economies'

Emmet Oliver Deputy Business Editor

Published 29/03/2011 | 05:00

Credit Suisse is the latest international lender to disclose its exposures to Ireland. Photo: Getty Images
Credit Suisse is the latest international lender to disclose its exposures to Ireland. Photo: Getty Images

One of the largest banks in the world, Credit Suisse, has revealed it no longer holds a single Irish government bond in its portfolio, as it seeks to cut its exposure to so-called "peripheral'' economies.

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The Swiss bank is the latest international lender to disclose its exposures to Ireland. The Irish Independent recently reported on the exposure of HSBC to Ireland.

The Swiss lender, which is governed by extremely high capital requirements from its own regulator, has retained some investments with Irish banks, however, totalling €500m.

The bank has lent about €700m to commercial borrowers, who tend to be internationally focused albeit headquartered in Ireland.

The Zurich-based bank is regarded as a conservative institution, even though it sustained losses from the sub-prime crisis. They were, however, lower than those of its chief Swiss rival, UBS. The bank has told its investors in new filings that it has collateral and credit default swaps (CDS) in place to hedge its exposure to peripheral economies.

Before taking these into account the bank said its exposure to Portugal, Italy, Greece, Ireland and Spain was €2.7bn, but this dropped to just €200m when the collateral and CDS were taken into account.

The lender did not reveal what Irish banks it had an exposure to. According to recent Central Bank figures, there are €16.4bn of unguaranteed unsecured bonds in the Irish banking system and €20.9bn of senior guaranteed bonds.

Last year the Swiss government decided that Credit Suisse and UBS should be forced to hold more capital than many of their international peers, considering their importance to the Swiss economy.

A government panel recommended that both UBS and Credit Suisse be required to hold total capital equal to at least 19pc of their assets -- almost twice as much as the 10.5pc demanded under the Basel III accord. The two banks are believed to have total assets more than four times the size of the entire Swiss economy.

Irish Independent

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