Uncertainty is likened to that of an earthquake: we know that when it starts it will end, but we cannot predict when or how much damage it will cause. Already without fame in recent times, with stocks gradually falling and financial results screaming for a zero on the right, Credit Suisse will have experienced one of the darkest days in its centenary history yesterday, as it witnessed a record devaluation of 30% on the Zurich stock exchange after the main shareholder, the Saudi National Bank, refused to inject more capital to hold the ends of the institution.
And since “trust and banking are concepts that go hand in hand,” argues Filipe Garcia, an economist at the IMF, the spiral of disbelief that began last Friday in the United States with the collapse of the Silicon Valley Bank (SVB) and the subsequent closure of the Signature Bank, did not take long to reach European markets and without exception, the scenario was downward for the banks, including those of the PSI, a trend that, says Henrique Tomé, an analyst at XTB, “shows the investor concerns about the sector”, but not “particularly about the banks” in question.
The environment was already one of fear, but economist João Duque clarifies that the bankruptcy of the American startup creditor will not be related in any way to the crisis that has arisen at Credit Suisse. With regard to investor withdrawal, the person in charge normalizes and warns that “until the regulators make and adopt the commitment to capitalize the banks as necessary, the market will remain concerned” – and the only way to convince the buyer, “who is fear”, to acquire shares “lowers the price”.
A hole in the Swiss bank, one of the largest in the world and has a cross-sectional activity that few have, “would always do damage, if only for 48 hours,” notes the same official. Filipe Garcia points to the “systemic importance” of Credit Suisse and also says that he believes most financial institutions are directly or indirectly exposed to it, which belong to the “to big to fail” group, that is, too big to fail. But is it really impossible for the giant to crash and its fall to trigger a crisis like the one in 2008? “It is one of the possible consequences if the bank actually gets into trouble,” warns the IMF specialist. João Duque equally analyzes the most catastrophic hypothesis and also warns that, if this is the beginning of a recurrence, it is known that, right after Credit Suisse, Germany’s Deutsche Bank and all major banks will collapse.
However, and looking at the chronology, experts believe that a lesson has been learned from that period and that “governments, regulators and supervisors are now equipped with more tools” to deal with situations like this. “Today, for example, a bank may undergo an intervention,” emphasizes Filipe Garcia, explaining that, when such a decision is made, the government and the central bank will demand “the sacrifice of shareholders and bondholders” – that is, they will have to realize that by taking this option they will lose all their money. The economist argues that if there is any form of intervention at Credit Suisse, it will be in that direction, “to avoid contagion to the rest of the financial system”.
Earlier than analysts expected, the Swiss central bank guaranteed financial help to the institution led by Ulrich Körner if necessary. The announcement was made in the late afternoon, following speculation that the government was being pressured to act as soon as possible. Once the uncertainty is over, will the financial market return to its normal rhythm? Filipe Garcia argues that there will certainly be “more conditions for European banks to recover”.
Mariana Coelho Dias is a journalist for Dinheiro Vivo
Source: DN
