Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

Credit Suisse Asks Swiss Central Bank for Support after Share Stumbles 22%

Wed 15 Mar 2023 | 11:49 PM
Taarek Refaat

Credit Suisse has called on the Swiss central bank to provide public support and issue a reassuring statement about the bank's financial health, three sources familiar with the talks told the Financial Times.

And that after the shares of Credit Suisse fell by up to 30%, which led to a large-scale sale of shares of European and American banks.

The sharp falls in share prices followed the collapse of the Silicon Valley bank in the US and after the head of Saudi Arabia's National Bank, which bought a 10% stake in Credit Suisse last year, ruled out providing the Swiss with more financial help.

It seems inevitable that the Swiss central bank will step in to provide a lifeline, said Octavio Marenzi, analyst at Obemas. The Swiss National Bank and the Swiss government are fully aware that a failure of Credit Suisse or even any losses on the part of deposit holders would destroy Switzerland's reputation as a financial centre.

The Swiss National Bank and Credit Suisse declined to comment.

Separately, the European Central Bank has asked EU lenders to disclose their exposure to Swiss lender Credit Suisse, a source familiar with the matter told the Financial Times.

The source added that the ECB discussed the pros and cons of making a public statement to try to calm the mood, but as of Wednesday afternoon, decided not to do so for fear of only increasing panic in the market.

The troubled Swiss lender's recent troubles have reignited a broad sell-off in bank stocks in Europe and the US, which were already reeling this week from the aftermath of the Silicon Valley collapse.

Shares of BNP Paribas declined by 9% and Societe Generale by 11%. Deutsche Bank and Barclays lost 7%, while ING shares fell 8%.

The broader equity markets fell, with the pan-European Stoxx 600 down 2.4%. The selling extended to Wall Street as US markets opened, with the S&P 500 down 1.8% in early trading led by banks.

Citigroup shares fell 5% and JPMorgan lost 4.6%. First Republic Bank fell 13%, while Bacoist fell 14%.

"Credit Suisse is an isolated case," said Charles-Henri Monschau, chief investment officer at CES Bank. But banks in Europe, due to regulatory pressure, had to take on negative-yielding bonds at the worst of times, are now facing large unrealized losses on the balance sheet and the market is wondering if Europe can see the same problem.