the central bank and the financial supervisor of Swiss He came out this Wednesday in defense of swiss credit (CS), after the second bank in that European country had the worst stock market crash in its 167 years of history.
(You may be interested in: The crisis that triggered the collapse of the Silicon Valley Bank in the United States)
«The CS satisfies the capital and liquidity requirements imposed on systemically important banks,» assured the Swiss National Bank (SNB, central bank) and the Financial Market Supervisory Authority (Finma) in a joint statement.
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«In case of need, the BNA will have liquidity at the disposal of Credit Suisse», added the institutions, in their first comments after a day in which the CS’s problems weighed down the world markets
The action of the entity, considered as the weak point of the banking network in Switzerlandfell 24.24 percent, with a market capitalization of just under 6.7 billion Swiss francs (7.200 million dollars).
Credit Suisse meets the demands
capital and liquidity requirements imposed on systemically important banks
During the day on Wednesday, it even lost 30 percent and reached a record low of 1.55 Swiss francs (1.66 dollars), despite the intervention of its president, Axel Lehmann, to reassure the markets. .
When questioned about whether the bank needed help from the government, Lehman replied that this «is not a problem», since the entity has “solid financial ratios”.
But his remarks failed to calm investors. The Credit Suisse collapse occurs after the bankruptcy of the Californian bank Silicon Valley Bank (SVB) by a wave of massive customer withdrawals that left the establishment struggling to fend for itself.
“It seems that more and more investors are looking at CS as the next most likely domino to fall,” said Neil Wilson, an analyst at Finalto. But if CS has to face «existential problems», they are another type of difficulties, in his opinion. “It’s really too big to go bankrupt,” he said.
Unlike SVB, the Swiss establishment is part of the 30 international banks considered too big so that they are allowed to fall into bankruptcy, which imposes a stricter regulation to withstand strong shocks.
Since the concern extends beyond Swissthe US Treasury stated that it was “monitoring the situation and in contact with its international counterparts”.
The situation dragged the European stock markets, which closed this Wednesday with heavy losses and losses of more than 3 percent in Paris; Frankfurt and London with 3.83 percent and more than four percent in Milan and Madrid.
interrogated by Bloomberg Asked whether the Saudi National Bank could invest more money, its president, Amar Al Judairy, said: «The answer is absolutely no, for several increasingly simple reasons, which are regulatory and statutory.»
The Saudis currently own 9.8 percent of the Swiss bank. “If we go above 10 percent, a whole new set of rules goes into effect,” he explained.
The Credit Suisse slide renewed fears of a much more serious financial crisis, and it was quickly compared to the collapse of Lehman Brothers in September 2008.
“The Credit Suisse crisis is a ‘Lehman moment’ for European and global markets. ‘Too big to fail and too big to be saved,’” warned Nouriel Roubini, who earned the nickname Dr. Doom for his accurate predictions.
Larry Fink, CEO of BlackRock, the world’s largest investment fund, warned in a letter to his investors that the drop in the Silicon Valley Bankqthat the Joe Biden government quickly dealt with contentr, it could just be the start of a “creeping crisis” in the US financial system, with more business blowups and crashes on the way.
The escalation shown by the financial crisis already seems to lead to a first consequence: the two main central banks in the world, the US Federal Reserve (Fed) and the European Central Bank (ECB), could alter their policy of raising prices. interest rates, which began to apply the previous year to lower inflation. In fact, these increases in interest rates have been pointed out as one of the causes of the current crisis.
For analysts, the Fed is likely to continue raising rates, but the decision on next week’s hike will be difficult. The challenge for the Fed now is how to prioritize inflation – which is still too high (at 6%) – in the face of growing risks to financial stability.
*With AFP and Bloomberg