Credit Suisse: A real roller-coaster! Panic has gripped glob | Trading Signals & Education
Credit Suisse: A real roller-coaster!
Panic has gripped global banking stocks last night for the second time in a week: the wave of fear prompted by the collapse of California’s Silicon Valley Bank (SVB) has been followed by fresh jitters over the stability of major European bank Credit Suisse.
What happened?
Yesterday, the stocks of the Swiss bank experienced a dramatic decline of over 30%, hitting an all-time low of approximately 1.56 Swiss francs (£1.40) per share.
This occurred after the Saudi National Bank (SNB), the bank's primary shareholder, stated that it would not offer additional funding due to regulations that restrict its ownership to 10% or less, which it has already reached with a current stake of 9.9%.
How big this bank is?
Credit Suisse is a Swiss multinational investment bank and financial services company headquartered in Zurich, Switzerland. It is one of the largest banks in the world, with operations in over 50 countries and a significant presence in Europe, the Americas, and Asia.
Not the first time that the bank has made bad headlines
Despite its reputation for stability and strength, Credit Suisse has been in the news recently due to a series of controversies and scandals that have rocked the bank and caused significant damage to its reputation.
One of the most significant issues that have plagued Credit Suisse in recent years is the fallout from the 2019 spying scandal. In that year, it was revealed that the bank had hired private investigators to follow one of its former executives, Iqbal Khan, who had left to join rival bank UBS. The incident sparked a major investigation by Swiss regulators, which ultimately resulted in Credit Suisse being fined CHF 30 million ($33 million) for its actions. The scandal also led to the departure of several senior executives, including CEO Tidjane Thiam.
Should we be worried?
Today the situation looks better this morning.
Credit Suisse experienced a surge of approximately 18% in its shares, thanks to a lifeline provided by the Swiss central bank to restore investor confidence.
This helped to recover some of the losses suffered the previous day, which had reduced its market value by 25%.
Credit Suisse's announcement of a $54-billion loan from the Swiss National Bank helped to stabilize the financial markets in Asia on Thursday and resulted in a modest rally in European equities.
However, analysts caution that this truce may be short-lived.
JPMorgan analysts believe that the loan from the SNB would not be sufficient to address investor concerns, and the current situation is no longer sustainable, which makes a takeover of Credit Suisse the most probable outcome.
Recent collapses of two regional U.S. banks have raised concerns among investors and bank customers about the financial system's resilience in the face of increasing global interest rates.
Trade safe!
