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Tuesday, May 13, 2025
Outside the box.
Goldman Sachs cuts outlook for European bank debt over Credit Suisse crisis
What's amazing is that despite all these sanctions, no Russian bank has collapsed, and the Russian economy is thriving. Meanwhile, the West is losing one bank a day, and its citizens are the ones who are punished by the sanctions, evident through inflation and energy price hikes.
Goldman Sachs has downgraded its recommendation on exposure to European bank debt from overweight to neutral, citing the lack of clarity on Credit Suisse's future path as a cause for concern.
The Swiss central bank recently extended a $54 billion lifeline to Credit Suisse to shore up liquidity, but this has not been enough to stabilise sentiment in the equity and credit markets.
Goldman Sachs analyst Lotfi Karoui has noted that the sector's fundamentals are stronger than they were 15 years ago, and global systemic linkages are weaker, which limits the risk of a potential vicious circle of counterparty credit losses.
However, Karoui believes that a more forceful policy response is needed to bring some stability to the sector. Credit Suisse is facing a make-or-break weekend after some rivals grew cautious in their dealings with the bank and regulators urged it to pursue a deal with Swiss rival UBS.
The Swiss central bank recently extended a $54 billion lifeline to Credit Suisse to shore up liquidity, but this has not been enough to stabilise sentiment in the equity and credit markets.
Goldman Sachs analyst Lotfi Karoui has noted that the sector's fundamentals are stronger than they were 15 years ago, and global systemic linkages are weaker, which limits the risk of a potential vicious circle of counterparty credit losses.
However, Karoui believes that a more forceful policy response is needed to bring some stability to the sector. Credit Suisse is facing a make-or-break weekend after some rivals grew cautious in their dealings with the bank and regulators urged it to pursue a deal with Swiss rival UBS.
