Swiss regulators stepped in today, throwing tens of billions of dollars into flagship Crédit Suisse as the bank's shares plummeted yesterday Wednesday (15/3).
The decision of the supervisory body of the Swiss capital market (FINMA) and the central bank aims to“strengthen” this banking group, which is considered systemically important, or otherwise too big to fail.
It is the first timeannounced the granting of so much liquidity to a major bank on a global scale since the banking crisis of 2008, however central banks had intervened to guarantee that financial institutions would withstand the pressure during the new coronavirus pandemic .
In the early hours of this morning, Crédit Suisse announced that it would borrow up to 50 billion Swiss francs (€50.6 billion) from the central bank.
“The additional liquidity will support the core business of Crédit Suisse and its customers as Crédit Suisse takes the necessary steps to create a simpler and more targeted bank based on the needs of its customers,” Switzerland's second-largest bank said. in a press release he published.
When the stock market closed yesterday, the bank had a capitalization6.7 billion Swiss francs (6.8 billion euros), crumbs for one of 30 banks around the world considered systemically important, or otherwise too big to fail.
The collapse of Silicon Valley Bank and smaller banks in the US triggered a crisis of confidence, which has now been transferred to Europe. Investors appeared to defy assurances, particularly from US President Joe Biden, of measures to guarantee the stability of the financial system, US and international.
Unprecedented drop
FINMA and the Swiss central bank also want to reassure, to convince that there is no risk of contagion of the turmoil in the US banking sector to the Swiss.
Earlier yesterday, leading executives of Crédit Suisse had already tried to calm concerns about the bank's stability, but failed to convince investors: its stock suffered its biggest drop in its history.
The managing director of the bank, Ulrich Koerner, in an interview with the Channel News Asia television network, assured yesterday that “we are a strong bank, we are a bank with a global dimension under Swiss supervision” and “we fulfill and exceed all the requirements of the supervisory bodies”, “the capital our liquidity base is very strong.”
Concern has gone beyond the Alpine country's borders, with the US Treasury Department announcing that it is “monitoring the situation” and “in contact” with authorities “internationally”.
While in France, Prime Minister Elisabeth Borne called on Swiss authorities to resolve Crédit Suisse's problems and instructed her finance minister to hold talks with his counterpart in Bern.
The dizzying decline
strong> started after statements by the president of the National Bank of Saudi Arabia, the most important shareholder of Crédit Suisse.
The Saudisthey joined the bank's capital in November. But the National Bank of Saudi Arabia has no plans to inject new liquidity into Crédit Suisse, mainly for regulatory reasons, Ammar al-Hudayri, its chairman, said yesterday.
Saudi National Bank owns 9.8 % of Crédit Suisse shares. However, under Swiss law, a green light is needed from FINMA, the Swiss supervisory body, to exceed the 10% limit.
In an interview with the Reuters news agency, Mr. al-Hudayri said he was “very satisfied” with the restructuring program of Crédit Suisse, which he described as “a very solid bank”.
“A completely different dimension”
This particular bank, founded in 1856, is described as a pillar of the Swiss financial sector, but is facing problems after the collapse of the British financial company Greensill, the trigger of a series of scandals that have put it in a difficult position . Since March 2021, Crédit Suisse's stock has lost 83% of its value.
“The pressure on Crédit Suisse has affected the already nervous market,” commented a Robobank analyst yesterday. Investors seem to be “increasingly worried” about the banks, argued an analyst of the company Finalto.
But, according to the latter, if Crédit Suisse ends up facing “an existential problem, we will be facing a completely different dimension “.
“It is really too important to be allowed to sink”, he explained: its size has nothing to do with that of SVB.
source: CNN Greece
