Though relatively small in terms of size and scale of operations, with just over ₹20,000 crore in assets, Credit Suisse is more relevant to India’s financial system than Silicon Valley Bank, though it would not be disruptive, according to brokerage firm Jefferies.
The firm noted that given the relevance of Credit Suisse to India’s banking sector, there would be softer adjustments in assessment of counter-party risks, especially in the derivative market. “We expect RBI to keep close watch on liquidity issues, counter-party exposures and intervene as necessary. This may also lead to institutional deposits moving more towards larger and quality banks.”
Credit Suisse has a significant presence in the derivatives market and has funded 60 per cent of its assets from borrowings of which the bulk is up to 2 months, the note said. Foreign banks are active in the Indian derivatives markets - forex and interest rates - where they have half the share.
In the traditional banking business, foreign banks have a minuscule presence in India, accounting for just about 6 per cent of total banking assets, 4 per cent of loans and 5 per cent of deposits.
Credit Suisse operates in India with one branch in Mumbai and it ranks 12th among foreign banks in terms of asset base. About 70 per cent of its assets held in the form of government securities. Its off-balance sheet items are seven times of total assets.
Its funding in India is largely short-term borrowings. Its deposit base is ₹2,800 crore.
Also read: Simply Put: Credit Default Swaps
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