According to a study by Jefferies, Credit Suisse is among the top 15 foreign banks in India and has assets worth more than Rs 20,000 crore.
According to financial services company Jefferies, 70% of the assets owned by Credit Suisse are in the form of government securities. Additionally, its assets are seven times greater than its off-balance sheet goods.
According to Jefferies, the banking behemoth with headquarters in Switzerland is also well-represented on the derivatives market and finances 60% of its assets via borrowings, 96% of which have terms of up to two months.
The memo also made note of the fact that Credit Suisse is more important to the Indian banking sector than the recently failed Silicon Valley Bank. They emphasised that the Reserve Bank of India (RBI) would step in and closely monitor the evolving scenario if things took a bad turn.
"We expect RBI to keep a close watch on liquidity issues, and counterparty exposures and intervene as necessary. This may also lead to institutional deposits moving more towards larger/ quality banks," said Jefferies.
The Jefferies note also added, "Borrowings in India form 73 per cent of total liabilities and 96 per cent of borrowings have tenure of up to 2 months. Deposit base is smaller at Rs 28 billion, forming 20 percent of total liabilities and 70 per cent are from subsidiaries. While the share of shorter-term liabilities is high, assets are mostly in liquid G-Secs."
It is important to note that there are not many foreign banks operating in India. They have a 6% share of the overall assets, a 4% share of the loans, and a 5% share of the deposits.
They are active in the derivative markets (forex and interest rates), where they have a share of up to 50%, despite their modest presence.
The major shareholder of Credit Suisse, Saudi National Bank, said on Wednesday that it would stop making investments in the Swiss bank, causing the stock to plunge. Moreover, "material weaknesses" in internal control were mentioned in its annual report.
