Friday, March 1, 2024

Credit Suisse falls, Swiss bank seeks support as ‘banks’ fall overnight via Investing.com

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Investing.com – Updated at 19:33 GMT

The Swiss central bank has announced that it is ready to provide Credit Suisse with liquidity if needed. Equity markets moved positively on the back of these data.

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Updated at 18:51 GMT

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Updated at 18:06 GMT

The US Federal Reserve is now meeting with the Treasury Department to assess the exposure of US banks and companies to Credit Suisse in light of the collapse.

The EU has asked its creditors to declare the extent of their exposure to ailing banks.

The bank’s credit default swaps (CDS) reached record highs, even in what was known as the danger zone.

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Swiss Credit Suisse sought support after shares of the Swiss National Bank plunged more than 30%, continuing a cycle of declines in global banks and markets.

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Credit Suisse appealed for a show of public support after Swiss National Bank shares fell as much as 30 percent, which also led to big sell-offs in European, American and Arab banks. The request for a reassuring statement on Credit Suisse’s financial health came after its shares fell to CHF1.56, according to three people familiar with the talks cited by The Financial Times.

Credit Suisse has sought a similar response from FINMA, two of the people said, but neither firm has yet decided to engage publicly.

Banks are failing

The sharp decline in share prices followed the collapse of Silicon Valley Bank in the US, and after the head of Saudi National Bank, which bought a 10 percent stake in Credit Suisse last year, ruled out further financial support for the Swiss lender.

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What happened to Credit Suisse?

Credit Suisse’s market capitalization fell to CHF7 billion ($7.6 billion), after the bank raised CHF4 billion in capital a few months ago. By Wednesday afternoon, shares were down 17 percent. “It seems inevitable that the SNB will step in to provide a lifeline,” said Octavio Marenzi, an analyst at Ubimas. “understand [البنك الوطني السويسري] A failure of Credit Suisse or any loss on the part of deposit holders would destroy Switzerland’s reputation as a global financial center and it is entirely the Swiss government’s responsibility.”

Bank stocks

Shares of BNP Paribas ( EPA: ) fell 9 percent and Societe Generale ( EPA: ) fell 11 percent. Deutsche Bank (ETR: ) and Barclays lost 7 percent, while ING shares fell 8 percent. Broader stock markets fell, with the pan-European Stoxx 600 down 2.4 percent. The selloff spread to Wall Street as U.S. markets opened, with the S&P 500 down 1.8 percent in early trade led by banks. Shares of Citigroup (NYSE: ) fell 5 percent and JP Morgan (NYSE: ) fell 4.6 percent.

Small U.S. banks that were on sale earlier this week fell sharply. First Republic Bank fell 13 percent, while Bagoist fell 14 percent. Banks in the Stoxx 600 have lost 16 percent in the past week on the back of SVB’s failure.

Investors said Credit Suisse’s troubles were a reminder that European banks also hold large amounts of bonds. “Credit Suisse is an isolated case, but banks in Europe, because of regulatory pressure, have been forced to load up on negative-yielding bonds at bad times and now face large unrealized losses on their balance sheets and are wondering if they can afford it,” Seiz said. Banc. Markets chief investment officer Charles-Henri Monschau said whether Europe could see the same problem as us.

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Bond markets rallied as investors increased their bets on interest rate cuts from the Federal Reserve later this year. Markets now expect a quarter-point interest rate hike from the U.S. Federal Reserve to the maximum by May, followed by a cut to 1.25 percentage points in December. Before the SVB decline, investors had expected a half-point increase later this month and rate hikes for the rest of 2023.

Credit Suisse..the crisis is old

Credit Suisse revealed on Tuesday that its auditor, PwC, had identified “material weaknesses” in its financial reporting controls, which delayed the release of its annual report last week after the SEC sought further clarification on the deficiencies. The bank’s five-year loan default spread, which signals downside for an investor, widened from 350 basis points at the start of the month to 565 basis points on Wednesday. Asked on Bloomberg TV whether the Saudi National Bank would be prepared to provide capital to Credit Suisse if it were called upon for additional financing, SNB President Ammar al-Qudairi said: “The simple answer is no, for many reasons. .” It is regulatory and legal.” Holding more than 10 percent of Credit Suisse would bring additional regulatory requirements, he said.In a statement to reporters at the event, he said he was pleased with the bank’s restructuring plan and did not see a need for more capital.

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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