Credit Suisse (CSGN) is the lastest banking name to cause anxiety for global investors, following Silicon Valley Bank’s collapse last week. While the two are not directly linked, it feels like we’re living in a period of heightened peril for the banking sector – and the global financial system.
Fears of Credit Suisse’s imminent collapsed swirled around the markets on Wednesday, shedding 25% off the bank’s value; but this was followed after market close by the news that the Swiss central bank was offering a lifeline of more than $50 billion. This sent shares soaring more than 30% on Thursday morning, giving investors the feeling of crisis averted, but for how long?
When SVB collapsed we looked at the UK funds with the largest portfolio weighting towards the tech-focused lender – 193 funds owned SVB, but most holdings were tiny. But what about Credit Suisse, one of Europe’s largest banks?
Methodology
We’ve screened Morningstar Direct data and there are more than 1,000 funds with a holding of more than 0.01% exposure to the Swiss bank. Removing ETFs and index trackers, which have no choice in owning Credit Suisse, reduces the list further. Logically, Swiss franc funds dominate the top 20 so removing these focuses the cohort in a different way. We’ve included euro-denominated funds and UK funds are dealt with separately.
Included funds have reported portfolio holdings up to February 28 this year, if that’s been possible – otherwise we’ve taken data as at January 31 if that’s the only data available (and December 31 data if that’s not available). These are the top 20 funds in terms of exposure for the UK and Europe.
Europe's Top 20 Funds by Exposure
Casting the net wide to euro-denominated funds, you get some chunkier weightings. The outlier here is Spanish-domiciled fund Merch-Oportunidades. Here, Credit Suisse is the largest position in the portfolio with a near 8% weighting, while Google owner Alphabet (GOOGL) is in second place. This fund has a Morningstar Quantitative Rating (MQR) of Negative. German- and Italian-domiciled funds are also in the mix but Luxembourg is the main domicile in this top 20 cohort. Away from the top 20, the percentage holding drops off dramatically: 217 funds of 233 in this list have a holding between 0.01% and 0.99%.
Looking at Scandinavia in addition to eurozone funds, the exposure is much smaller. Viewing Swedish krona-denominated funds, the biggest is Storebrand Europa with a 0.14% weighting and apart from Handelsbanken Europa Index, the rest of the 20 funds have an exposure below 0.10%. In Norway, there are only 12 funds that own Credit Suisse in Morningstar Direct – as in Sweden, the exposure is sub 0.10% largely. The only exception is SEB Prime Solutions Sissener Canopus with a 0.83% weighting as at February 28, 2023.
In Denmark, it's a similar story in terms of the number of funds. We found that 26 have a weighting above 0.01% and the biggest exposure is Sparinvest Value Europa with 1.62%. Apart from the top three funds, the rest have a sub 1% weighting.
UK Life and Pension Funds the Main Owners
In the UK, if you take out life and pension funds – that typically hold financial stocks anyway – you don’t see many active funds with any significant exposure to Credit Suisse. The fund with the largest holding is L&G European Equity Income, but that’s still less than 1% of the portfolio.
Otherwise, it’s not generally held by active European funds. Part of the reason could be that Credit Suisse’s problems have been well trailed – over one year, the Zurich-listed shares are off 71% and nearly 80% over a five-year period. For the UK at least, it’s possible to feature top 10 funds as outside of that list the exposure drops to below 0.10%. These funds generally have MQRs between Neutral and Bronze. As you can see, the majority are life or pension funds.
