Swiss regulator statement
The Swiss National Bank (SNB = central bank) and the Swiss Financial Market Supervisory Authority (FINMA) issued a joint statement on the 15th, announcing support for the country’s financial giant Credit Suisse, which is concerned about financial instability.
“There is no indication that direct risks from the current disruptions in the US banking market are spilling over to Swiss financial institutions,” the SNB and FINMA said in a statement. Credit Suisse’s share price has been “impacted by market reactions in recent days,” but the bank “meets stringent capital and liquidity requirements for systemically important banks,” it said. to calm market sentiment.
In addition, he took an unusual step by announcing that he was ready to help, stating, “If necessary, SNB will provide liquidity to Credit Suisse.”
According to the Financial Times, executives at Credit Suisse met with officials from SNB and FINMA after the stock and bond prices of Credit Suisse plunged following the collapse of three banks, including Silicon Valley Bank. He asked for a statement of support from Credit Suisse.
“The Swiss government is fully aware that the collapse of Credit Suisse, or even the loss of depositors, would damage Switzerland’s reputation as a financial center,” said Octavio Marenzi, chief executive of Opimas. pointed out.
Sources familiar with the matter said Switzerland was under pressure from major powers and others to take action.
Origin of stock price decline and impact on European banks
In its annual report released on Wednesday, Credit Suisse said it had “significant weaknesses” in its internal controls for financial reporting for 2021 and 2022. Auditing firm PwC pointed out deficiencies in the bank’s internal controls, sources said.
Furthermore, on the 15th, it was reported that Saudi National Bank (SNB), the largest shareholder in Saudi Arabia and the largest in Saudi Arabia, would not make additional investment in Credit Suisse, and the stock price of Credit Suisse temporarily fell by more than 30% compared to the previous day. Updated the lowest price ever.
Also, in the credit default swap (CDS) market, which factor in default risk, guarantee rates soared, pushing the bank’s five-year premium to a record high.
The fall in Credit Suisse’s share price also had a big impact on European bank stocks, which were already reeling from the failure of Silicon Valley Bank. BNP Paribas, Societe Generale, Deutsche Bank, ING (Netherlands) and Barclays (UK) recorded losses of 9-12%.
In the US market, major US banks such as JPMorgan Chase, Citigroup and Bank of America all fell. Mid-sized banks were also downgraded to speculative grade. First Republic Bank fell 26% from the previous day.
The plight of Credit Suisse
Credit Suisse has been hit by a string of scandals in recent years. A deal with bankrupt British Greensill Capital led to the closure of the fund, and a deal with US-based Arquegos Capital Management posted huge related losses.
Credit Suisse concluded in an independent investigation that the bank lacked risk management and risk awareness, and that the execution of supervisory responsibilities and measures to mitigate and strengthen risks were inadequate. announced that it will work on In October last year, the company announced a business restructuring plan, but the market voiced disappointment, and the stock price was already sluggish.
connection:Credit Suisse posted a loss of about 600 billion yen, announced a restructuring plan Stock price -19%
Credit Suisse announced on the 16th that it intends to borrow up to 7.1 trillion yen (50 billion Swiss francs) from the Swiss National Bank, accepting liquidity support from the Swiss authorities.
In addition, Credit Suisse International said in a statement that it would buy back some senior bonds for up to 3 billion Swiss francs (428.8 billion yen).
Credit Suisse is one of the world’s largest universal banks, and because it operates in countries around the world, it is feared that if it were to fall into financial collapse, it could trigger a financial crisis worse than the 2008 collapse of Lehman Brothers. there is
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