Credit Suisse’s shares plunged by up to 30% recently, leading to a broader sell-off of European and US bank stocks. In response, the Swiss central bank has offered a liquidity backstop to the bank, stating that there were no direct indications of risk of contagion for Swiss institutions. Credit Suisse executives met with representatives from the Swiss National Bank and financial regulator Finma after the equity and bonds fell in value. However, the chairman of the Saudi National Bank, which bought a 10% stake in Credit Suisse last year, has ruled out providing the Swiss lender with any more financial assistance. Credit Suisse shares closed down 24.2%, and its market value fell below SFr7bn ($7.6bn).
Credit Suisse had requested a public statement of support, and the SNB and Finma confirmed that Credit Suisse meets the higher capital and liquidity requirements of systemically important banks, and that the SNB would provide liquidity if necessary. Credit Suisse has been hit by several scandals, including the largest trading loss in its history, and the closure of $10bn of investment funds linked to collapsed finance firm Greensill. The steep decline in share price followed the Saudi National Bank ruling out providing the Swiss lender with any more financial assistance, after buying a 10% stake in Credit Suisse last year. Analysts from JPMorgan suggested that the SNB might guarantee Credit Suisse’s deposits and force it to sell its investment bank, or a sale of the lender to local rival UBS.
Published by Huddleston Jones (March, 2023)
