Credit Suisse experienced its darkest day this Wednesday and suffered the biggest stock market punishment in 167 years of history caused by a general lack of confidence in the banking sector following the failure of three institutions in the United States, a situation that found it weakened by its lousy results and several scandals.
Financial analysts in Switzerland believe, however, that the current atmosphere of panic – with global consequences and especially in Europe – was excessive, since the country’s second bank has characteristics that fundamentally distinguish it from failed US regional banks.
Despite this, the bank had a nightmare on the Zurich Stock Exchange, where it is listed, and its shares lost 30% of their value before bouncing back slightly to close down 24%, leaving the title price at 1.7 Swiss francs. (€1.74) when they were never below 2 francs.
In the context of the 2008 financial crisis, the bank was classified as “systemically important” (“too big to fail”) for the Swiss economy, which meant imposing a set of very strict rules on its own funds and the level of liquidity it was aware of.
At the same time, current legislation guarantees it either stabilization, consolidation, or planned liquidation in case of emergency – a lesson learned from the 2008 crisis, when the Swiss state and the Swiss National Bank had to bail out the bank. the most important in the country in terms of market value.
In Europe, regulations tend to be much higher than in the US, where the Obama administration tightened them after the bank collapse but then loosened them again during Donald Trump’s presidency.
Weakened by its disappointing performance and failure to rebuild lost confidence, Credit Suisse has so far been the main casualty of the earthquake outside the United States, in which its banking system shut down three banks, including one favored by burgeoning and young banks. American technology companies.
For Credit Suisse, the hardest hit of the day came from its main shareholder, the National Bank of Saudi Arabia, which, while indicating that it is satisfied with the bank’s measures to restore its accounts and return to a growth path, clarified that it is not ready to increase its current investment in the Swiss financial institution. an institution that accounts for 9.88% of its shareholders.
The investment firm’s president told Bloomberg that it is unwilling to enter into a new regulatory system (both in Switzerland, the European Union and Saudi Arabia itself) that will be activated if its participation exceeds 10%. This comment immediately brought down the shares of the bank.
The Swiss venture’s week began with a drop in its price as soon as word got out about what was going on in the US, and things didn’t get any better on Tuesday, following the release of its annual report, which admitted that “fragility” had been found in its internal controls.
Today, the descent into hell continued for the bank, which was attacked in the market for the loss of confidence, the most valuable asset for a financial institution of its kind. EFE
Source: Aristegui Noticias
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
