The Swiss bank has over Rs 20,000 crore in assets (12th among foreign banks), presence in derivatives market and funded 60% of assets from borrowings, of which 96% is up to two months, Jefferies said.

“Still, it is small for the banking sector with 0.1% share of assets. We watch out for liquidity issues and any rub-off on counter-party risk assessment (especially in derivatives) and the deposit market may move towards larger, quality banks,” it said.

SVB doesn’t have any banking operations in India.

Foreign banks own 6% of banking assets. “Foreign banks have a relatively smaller presence in India with 6% share in total assets, 4% in loans and 5% in deposits. They are more active in the derivative markets (forex and interest rates) where they have 50% share. Most of them are present as branches of the parent bank with only a few present as a wholly-owned subsidiary,” Jefferies said.

Nevertheless, they retain capital, liquidity and make similar annual report disclosures as Indian banks, it said. Top five foreign banks in India by assets are HSBC, Citibank (it has now sold its consumer business to Axis), Standard Chartered, Deutsche Bank and J.P. Morgan.|

Credit Suisse is present as a branch and has 1.5% share among foreign banks’ assets and 0.1% in sector assets. “Credit Suisse has only one branch in India and has a total asset base of over Rs 20,000 crore that is 12th largest among foreign banks with 1.5% share in foreign banks’ assets and 0.1% in sector assets. 70% of assets are in G-Secs (short term) and have 0 NPLs,” Jefferies said.

“Alike foreign banks, their off-balance sheet is 7 times the total assets and they are 14th largest foreign bank in the system. Funding is from short-term borrowings and related party deposits. Borrowings in India form 73% of total liabilities and 96% of borrowings have a tenure of up to 2 months,” Jefferies said. Deposit base is smaller at Rs 2,800 crore, forming 20% of total liabilities and 70% are from subsidiaries.

While the share of shorter-term liabilities is high, assets are mostly in liquid G-Secs. “In this context, we note that during Q42022, the global customer deposit base of the bank contracted by 37% QoQ to CHF233 bn and total assets contracted by 24% QoQ to CHF531 bn,” Jefferies said.

“It expects a softer impact on banking in India. “Given the relevance of Credit Suisse to India’s banking sector, we see softer adjustments in assessment of counterparty risks, especially in the derivative market. We expect RBI to keep close watch on liquidity issues, counterparty exposures and intervene as necessary. This may also lead to institutional deposits moving more towards larger, quality banks,” Jefferies said.