Banks in turmoil LIVE | Credit Suisse to borrow from Swiss central bank, ECB may announce rate hike

Investment Banking-major Jefferies said that Credit Suisse is more relevant to India's financial market than Silicon Valley Bank, whose collapse has hit global markets since the last weekend. 

"Given the relevance of Credit Suisse to India's banking sector, we see softer adjustments in assessment of counter-party risks, especially in the derivative market. We expect Reserve Bank of India (RBI) to keep close watch on liquidity issues, counter-party exposures and intervene as necessary. This may also lead to institutional deposits moving more towards larger/ quality banks," the New York-headquartered investment banking-major said in a company note. 

European Central Bank President Christine Lagarde hinted last month that a rate hike was in offing. With the banking sector treading a cautious path, it is expected that a 50 basis point rate hike will be announced on Thursday. The decision could have serious ramifications for the European markets.

The Credit Suisse turmoil has affected the Indian market as well. India's premier stock index Sensex was down 200 points while Nifty was hovering around 16900 during the opening session. 

US prosecutors are investigating the collapse of Silicon Valley Bank, a Wall Street Journal report said. The firm's sudden collapse left regulators scrambling to contain the fallout. The Securities and Exchange Commission has also launched a parallel investigation, the publication said. The investigation may not result in allegations of wrongdoing or charges being filed, WSJ said.

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Credit rating agency Moody's on Wednesday sent the alarm bells ringing by revising its outlook of the US banking system. It cut the sector's outlook to "negative" from stable and warned of "a rapid deterioration in the operating environment". 

According to a BBC report, given the gravity of the situation, Bank of England has telegrammed Credit Suisse and Swiss authorities to keep a close eye on the developing situation. 

The Swiss central bank on Wednesday said that the embattled Credit Suisse's capital and liquidity levels were adequate but emphasised that it is prepared to make liquidity available to the bank if required.

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The shares of the bank went for a freefall on the Swiss stock exchange, declining more than 30 per cent to hit a record low of 1.55 Swiss francs.

Switzerland's second-largest bank Credit Suisse on Wednesday said it will borrow up to $54 billion from the Swiss central bank to shore up its finances. The decision has been taken to strengthen the bank, said the officials. 

"My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs," said Ulrich Koerner, Credit Suisse's CEO.