Shares in Credit Suisse have plunged and dragged down other major European lenders as fears about deeper problems in the world banking system have spread in the wake of bank failures in the United States.
Credit Suisse shares lost more than a quarter of their value on Wednesday, hitting a record low after the Swiss bank’s biggest shareholder, the Saudi National Bank, told news outlets that it would not inject more money into the bank, due to regulatory restrictions. It is worth noting that the $CS has been beset by problems for a while, long before the US banks collapsed.
The share price of $CS has been declining since 2007 and is currently at record lows of $2.16. Credit Suisse stock lost about 30 percent of its value, dropping to about 1.60 Swiss francs ($1.73) per share, before clawing back to a 24 percent loss at 1.70 francs ($1.83) in late afternoon trading on the SIX stock exchange. At its lowest, the price was down more than 85 percent from February 2021.
The turmoil caused an automatic suspension in trading of Credit Suisse shares on the Swiss market and sent stock in other European banks tumbling, some by double digits yesterday.
That fanned new fears about the health of financial institutions following the recent collapse of Silicon Valley Bank and Signature Bank in the US.
The Swiss central bank said on Wednesday evening that capital and liquidity levels at Credit Suisse were adequate but stressed it was ready to make liquidity available to the institution if needed.
“Credit Suisse meets capital and liquidity requirements for systemically important banks. In case of need, the SNB will put liquidity at Credit Suisse’s disposal,” the Swiss National Bank and Swiss financial regulator Finma said in a joint statement.
The SNB has made a loan of over $50 billion available to the ailing bank and it’s market share price soared 30% at the market open today, Thursday.
Meanwhile, stocks on Wall Street fell again as worries grew about the strength of banks on both sides of the Atlantic. The exception to this was the tech heavy NASDAQ, which closed the day up +3.5% on the week.
Oil prices also plunged more than $5 a barrel to their lowest in more than a year despite a recovery in Chinese oil demand.
European Central Bank. President Christine Lagarde said last week, that the Apex bank would “very likely” increase its benchmark rates by half a percentage point to press its fight against inflation. Markets were watching closely to see if the bank carries through despite the latest recent turmoil.
The US Treasury said it is monitoring the Swiss bank’s crisis and is in touch with global counterparts about it.
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