London (CNN) Switzerland’s central bank said on Wednesday it was ready to provide financial support to Credit Suisse after shares in the country’s second-biggest lender plunged as much as 30%.
In a joint statement with Swiss financial market regulator FINMA, the Swiss National Bank (SNB) said Credit Suisse (CS) met the “stringent capital and liquidity requirements” imposed on banks of importance to the wider financial system.
“If needed, the SNB will provide liquidity to the CS,” they said.
Already Silicon Valley is on edge after the bank failure Last week in the US, investors unloaded stocks Trapped in a Swiss bank Earlier in the day, it sent them to a new record low after its biggest backer appeared to rule out further funding.
Swiss authorities said in their statement that “problems at some banks in the US do not pose a direct contagion risk to Swiss financial markets”.
“There are no signs of direct contagion to Swiss firms from the current turmoil in the US banking market,” the report continued.
Saudi backers don’t want to increase funding
The head of Saudi National Bank — Credit Suisse’s largest shareholder, following a capital increase last fall — said Wednesday it would not increase its stake in Credit Suisse.
“The answer is absolutely no for a number of reasons,” Ammar Al Qudhairy told Bloomberg on the sidelines of a conference in Saudi Arabia. “I cite the simple reason of regulatory and legal. We have 9.8% in banking now – if we go above 10%, all kinds of new rules will kick in, be it our regulator or the European regulator or the Swiss regulator,” he said. “We don’t want to join a new regulatory regime.”
Credit Suisse, once a big player on Wall Street, has been plagued by a series of missteps Compliance failures Over the past few years it has damaged its reputation with customers and investors, and has cost many top executives their reputations. jobs.
Customers withdrew 123 billion Swiss francs ($133 billion) from Credit Suisse last year — mostly in the fourth quarter — and the bank reported a net loss of nearly 7.3 billion Swiss francs ($7.9 billion) for the year, the biggest since the 2008 global financial crisis. .
In October, the lender launched an “extensive” restructuring plan that saw it cut 9,000 full-time jobs, freeze its investment bank and focus on wealth management.
Al Qudayri said he was happy with the restructuring and added that he did not think the Swiss lender would need more money. Others are not so sure.
Credit Suisse will not have enough capital to absorb losses in 2023 because its financing costs are prohibitive, said Johann Scholtz, Morningstar’s European banking analyst.
“We believe Credit Suisse needs another franchise to prevent customer churn and ease the worries of wholesale finance providers. [share] The issue,” he commented on Wednesday. “Swiss banking, asset management and parts of the wealth management and investment banking business – we believe are breaking even with healthy businesses. listed.”
‘Not just a Swiss problem’
The bank’s shares closed down 24% in Zurich on Wednesday, and the cost of buying insurance against Credit Suisse default risk hit a new record, according to S&P Global Market Intelligence.
Credit Suisse declined to comment.
The decline spread to other European banking stocks, with French and German banks such as BNP Paribas, Société Générale, Commerzbank and Deutsche Bank falling between 8% and 12%. Italian and UK banks also collapsed.
Two supervisory sources told Reuters that the ECB had contacted the banks to inquire about their exposure to Credit Suisse. The ECB declined to comment.
While the problems at Credit Suisse are widely known, with about 530 billion Swiss francs ($573 billion) in assets, it presents the biggest headache.
“[Credit Suisse] “is highly globally interconnected with many subsidiaries outside of Switzerland, including the US,” wrote Andrew Cunningham, chief European economist at Capital Economics.
The blows continue for Switzerland’s second-largest bank. On Tuesday, it admitted “material weakness“Its financial statements and bonuses for top executives were stripped.
Credit Suisse said in its annual report that “the board’s internal control over financial reporting was not effective” because it failed to adequately identify potential risks to the financial statements.
The bank is urgently developing a “remedial plan” to strengthen its controls.
Speaking to Bloomberg TV on Tuesday, Credit Suisse CEO Ulrich Koerner said the bank saw “pretty good inflows” on Monday, even as markets were rattled by the collapse of SVB and Signature Bank in the US.
Overall, Koerner added, bank outflows were “significantly moderate” after customers withdrew 111 billion francs ($122 billion) in the three months to December. In its annual report, the bank said that outflows had not yet reversed as of the end of last year.
— Olesya Dmitracova and Livvy Doherty contributed to this article.
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