Barclays, Credit Suisse May Need Capital for Fines, Report Says
Sept. 11 (Bloomberg) — Barclays Plc, Britain’s second- biggest bank, and Credit Suisse Group AG may need to raise more capital to cover the cost of potential fines, Berenberg said.
The lenders have the lowest reserves among European banks to protect against possible litigation, analysts led by James Chappell wrote in a note to clients dated yesterday. Berenberg has a hold recommendation on Barclays and a sell on Credit Suisse.
“Barclays and Credit Suisse have the smallest buffers,” Berenberg wrote. “For both, there is a risk that a significant adverse fine could trigger an equity capital raising.”
Barclays was fined 290 million pounds ($470 million) in 2012 for attempting to rig interest rates, while Credit Suisse, Switzerland’s second-largest bank, paid $2.6 billion in May to settle a U.S. tax probe. Berenberg cited foreign-exchange litigation issues among 63 investigations into European banks that remain open.
“Litigation fears have come to cast a long shadow” over the banking industry, Berenberg said. “For those lacking suitable buffers, these potential fines will hamper capital return.”
Barclays is estimated by Berenberg to have a litigation buffer of about 400 million pounds, while Credit Suisse has 3.9 billion Swiss francs ($4.2 billion). That compares with $21.3 billion at HSBC Holdings Plc, Europe’s biggest bank, the analysts said.
A spokeswoman for Barclays declined to comment, while Credit Suisse didn’t immediately provide a comment.
Barclays faces costs of as much as 1.2 billion pounds for its alleged rigging of currency markets, lying to clients about its U.S. dark pool and mis-selling interest-rate swaps, Sanford C. Bernstein Ltd. said last month.
To contact the reporter on this story: Richard Partington in London at rpartington@bloomberg.net To contact the editors responsible for this story: Simone Meier at smeier@bloomberg.net Jon Menon, Steve Bailey
