Source says Credit Suisse India FX ops shut; CCIL ups trade margins

Informist, Wednesday, May 10, 2023


By Aaryan Khanna


NEW DELHI – Credit Suisse has shut foreign exchange operations in India, but other proprietary trading and client services have remained unaffected in the wake of its sale to UBS, an official familiar with the situation said.


Clearing Corp of India Ltd has raised margin requirements for the bank on its trades in fixed income securities and rupee derivatives, the official said, declining to be identified due to the sensitivity of the subject.


In India, the Swiss lender operates in the private banking space as Credit Suisse AG, and as brokerage firm Credit Suisse Securities (India) Pvt Ltd. Local units ultimately roll up to Credit Suisse Group AG, which UBS AG agreed to buy in a deal brokered by Swiss financial markets regulators and the Swiss government on Mar 19.


"The bank shut down forex operations (in India) in March itself," the official said. "The Clearing Corp had increased the margin requirements in the interim which have been fulfilled. Other than that, trading operations have not been affected or disrupted."


Foreign exchange operations were wound up as the market was largely over-the-counter, in which the bank found it difficult to trade given the global uncertainty over its future, the official said.


A communications official at Credit Suisse AG declined comment and referred questions to UBS AG. Two emails to UBS' Asia-Pacific communications division remained unanswered. Officials from Clearing Corp of India declined to comment on the increase in margin, citing confidentiality of transaction-related norms.


Clearing Corp has increased its scrutiny of the bank due to the merger and representatives from both sides meet regularly, though no guidelines have been imposed or suggested, the official said.


Clearing Corp operates trade platforms for government bonds as well as for overnight indexed swap rates, the most traded rupee-denominated derivative instrument. It is under the jurisdiction of the Reserve Bank of India.


"The two sides met in the last week of April, and no new norms have been proposed," the official said. "No ring-fencing is happening; the bank has full control to trade as it wants, and books its profits or losses…"


The bank also offers its full suite of client services on fixed income securities, though it is likely to have reduced customers in the wake of the uncertainty due to the merger, the official said.


"Until the completion of the merger, which is subject to customary closing conditions and is expected to be consummated by the end of 2023, Credit Suisse will continue to conduct its business in the usual way, in close collaboration with UBS," reads a statement by Credit Suisse on its website.


Credit Suisse has a share of 1.5% of foreign banks' assets in India and a fractional 0.1% share of overall banking assets in the country, Jefferies had said in a report in March, just before the sale was announced. It has total assets of over 200 bln rupees in India, of which 70% were in short-term government securities, the brokerage firm had said.  End


Edited by Avishek Dutta


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