Downgrade for UK as Credit Suisse hits alarm bell over risks

LEADING Swiss bank Credit Suisse is reining in its risky property lending to Britain and is keeping a closer scrutiny on UK share and bond trading following last year’s Brexit vote.

Filings for Credit Suisse show its internal risk analysts have downgraded its rating for Britain.

At the same time the group’s private bank, which serves wealthy clients, has lowered its loan-to-value ratios for residential properties.

Sources stressed that the bank’s actions would not necessarily mean a reduction in lending to UK property buyers, but could change the type of loans Credit Suisse was prepared to make.

A bank source said: ‘It hasn’t changed our appetite. We just want to take less risk.’

Credit Suisse’s securities arm – which acts as a middleman between major financial institutions trading shares and bonds – has also lowered its ‘exposure trigger’ for the UK.

This is the level at which managers in Britain must seek approval from risk experts for any increase to UK assets.

Sources said Credit Suisse’s moves were being mirrored by other banks across the City.

The firm said: ‘While there have been no instances of counterparty distress ... following the referendum, credit risk

management has downgraded its UK country rating.

‘This reflects the expected difficulties of the exit negotiations after Article 50... and lower economic growth forecasts.’

The bank has not said what it plans to do to continue servicing EU clients when Brexit takes effect.

Meanwhile, the Bank of England is this week expected to downgrade its own short-term forecasts for the UK economy after the dip in GDP growth seen in the first quarter. Economists said the Bank may trim its 2 per cent growth prediction for 2017 to 1.8 per cent.