The announcement that Saudi Bank (who own around 10% of Credit Suisse) would not invest in more equity in Credit Suisse triggered the recent share price collapse (and large widening in credit spreads). In reality, regulation prohibits Saudi Bank to own more than 10% in any case. The Swiss National Bank has stepped in to provide Credit Suisse with additional liquidity. Importantly, both the Swiss National Bank and the Swiss Regulator have confirmed that Credit Suisse continues to meet all their liquidity and solvency requirements – they do not consider the bank as ‘non-viable’. Credit Suisse shares bounced back shortly thereafter.
Credit Suisse is currently on a restructuring programme to become a simple Swiss Retail Bank, Investment Bank to finance Swiss clients and Wealth Management, which whilst it may take a while to achieve, will make it a simple and well-capitalised bank. In the meantime, there may be some bumpy periods as some more deposits exit the bank – though clearly the Swiss National Bank is willing to assist. There is no evidence to suggest that there is widespread problem in the banking sector.
Within Omnis’ funds, we do not own any shares of Credit Suisse and some of our bond funds have a small exposure to Credit Suisse’s bonds. For a Balanced* client, the exposure to Credit Suisse bonds equates to 0.07%. The Multi-Asset Income fund has 0.7% exposure to Credit Suisse-issued bonds. We have no derivate’s with Credit Suisse across any of our funds so have no counterparty risk.
*using OMPS Balanced
Issued by Omnis Investments Limited. This update reflects the views of Omnis at the time of writing and is subject to change. The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your financial adviser. Omnis is unable to provide investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given. Past performance should not be considered as a guide to future performance.
The Omnis Managed Investments ICVC and the Omnis Portfolio Investments ICVC are authorised Investment Companies with Variable Capital. The authorised corporate director of the Omnis Managed Investments ICVC and the Omnis Portfolio Investments ICVC is Omnis Investments Limited (Registered Address: Auckland House, Lydiard Fields, Swindon SN5 8UB) which is authorised and regulated by the Financial Conduct Authority.
Keeping you updated
You can find updates on the situation and the impact on markets in Omnis’s weekly Investment Club Podcast and Weekly Market Summary, which can be found on their website (https://omnisinvestments.com/) and is updated every Monday morning.
Furthermore, you can also find out how Omnis are positioned in the Omnis Managed Portfolio Service at all times here (https://omnisinvestments.com/portfolios/omnis-managed-portfolio-service/portfolio-updates)
If you would like to speak with us, then please make contact.
Best regards
Andrew & Richard
Andrew S. Turner MSc Cert CII FPFS Certs (MP & ER) and Richard Olive BA (Hons) APFS
Karrek Chartered Financial Planners