Switzerland’s central bank and financial regulator said Wednesday that they would provide liquidity to Credit Suisse, if necessary, in the face of the worst moment in the 167-year history of the second-largest Swiss bank.
“Credit Suisse complies with the capital and liquidity requirements imposed on systemically important banks. If necessary, the SNB will provide liquidity to Credit Suisse,” the Swiss National Bank (SNB) and the Swiss financial regulator said in a joint statement ( finma). earlier this Wednesday night, after silence all day.
This bank lived today its darkest day on the stock market, losing a quarter of its value and its shares falling to a historically low level, below 2 Swiss francs.
Founded in 1856, the Zurich-based bank has lost around 30% of its value on the Zurich stock exchange since the middle of last week, at a time when its own internal crisis, which could date back to 2019, It was intertwined with the more general one that Global banking is going through these days triggered by the bankruptcy of Silicon Valley Bank (SVB) in the US.
Earlier in the day, Credit Suisse’s two top executives tried to reassure the banking giant’s financial strength but failed to convince investors, who inflicted the bank’s shares the worst drop in its history.
For the SNB and Finma, “the current turmoil in the US banking market does not suggest that there is a risk of direct contagion to Swiss establishments.”
The concern goes beyond the borders of the Alpine country and the US Treasury Department said it is “monitoring the situation and in contact with its international counterparts.”
In France, Prime Minister Elisabeth Borne publicly called on the Swiss authorities to resolve the bank’s problems and asked her finance minister to speak with her counterpart in Bern.
The bank has been registering million-dollar losses for two years: in 2021 they amounted to 1,572 million Swiss francs (1,600 million euros) and in 2022 they almost quintupled to 7,293 million francs (7,400 million euros).
Credit Suisse also suffered liquidity losses of 123.2 billion Swiss francs (126 billion euros) last year.
Among the main factors behind the shady accounts is their exposure to venture firms that collapsed in previous years, such as the US hedge fund Archegos and the Anglo-Australian financial services company Greensill.
In addition to the financial problems, there are many other, reputational problems at the bank, which have caused a profound reshuffling of the board in recent years.
The main strategy implemented by the bank to try to end its crisis -unsuccessfully so far- is the ambitious restructuring plan launched in October last year, which included a capital increase of 4,000 million francs (4,090 million euros), the layoff of 9,000 workers worldwide and a 15% cost reduction.
The capital increase meant that the Saudi National Bank became the company’s first shareholder, after investing 1,500 million Swiss francs (1,530 million euros) in shares.
The Saudi bank’s president, Ammar al Khudairy, said in an interview today that the bank would not increase this investment, which contributed to Credit Suisse falling further today on the stock market.
Until last year’s capital increase, the largest shareholder was the US group Harris Associates, which left the bank after the capital increase, and is now more than 20% owned by Middle Eastern investors.
The Saudi state bank is followed by the Qatar Investment Authority (QIA), manager of the emirate’s sovereign wealth fund, with 5.03% of the shares, and then the Saudi Olayan group, linked to a wealthy Saudi family, with 5% of the shares. Actions. Actions. .
The multiple problems of the bank, which have been in the news in the last four years, fuel rumors of bankruptcy and that it is becoming a kind of “Swiss Lehman Brothers”, although the country’s economic press is also considering the possibility of being absorbed. by its main competitor in the country, UBS.
Source: TSF
