Credit Suisse withdraws from Ally loan arrangement

Thu Apr 14, 2016 10:00am EDT
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By Will Caiger-Smith

NEW YORK, April 14 (IFR) - Credit Suisse has withdrawn from an 18-bank group that provides a multi-billion dollar credit line for Ally Financial, one of the main US auto lenders, sources close to the matter told IFR.

CS failed to come to terms with Ally on a new US$11bn warehouse lending facility that was announced in March. Another bank, understood to be Canada's CIBC, also exited the group.

One source said increased costs for Credit Suisse due to new regulatory capital requirements were the obstacle to it reaching agreement on terms with Ally.

Yet the move also comes amid turmoil at Credit Suisse, whose CEO Tidjane Thiam has presided over nearly US$1bn in writedowns in the last two quarters that he said had caught him off-guard.

A source at a bank still in the warehouse said the withdrawal signaled that CS was ending the relationship under broader pressure to cut costs and stem losses.

"[The warehouse terms] worked for 16 other people," the banker said, referring to the other institutions still involved in providing the credit line.

"If everyone was fine with it except those guys, that's them pulling out."

But a person close to the situation said that the break with Ally was unrelated to Credit Suisse's losses and insisted the bank was not cutting back its structured finance business.   Continued...