Credit Suisse shares bounce back after a black Wednesday

Investors sent the stock price skyrocketing Swiss credit After the lifeline of more than 50 billion francs launched by the central bank to the banking giant to reassure world markets. Thursday, at the opening of the session, the title Credit Suisse jumped more than 30% in a strong volume of exchanges. The day before, the action had suffered the worst session in its history after a movement of panic following the statements of its largest shareholder, the Saudi National Bank. The stock had hit a historic low of CHF 1.55.

To stop the panic movement, Credit Suisse – which is part of the very small club of banks which are considered to play such an important role that they cannot be allowed to go bankrupt – announced in the middle of the night in Europe that she went appeal to the Swiss central bank to borrow up to 50 billion Swiss francs (50.7 billion euros) in order to “preventatively strengthen» its cash. It will also carry out a series of debt buyback operations for approximately 3 billion Swiss francs.

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Reassuring and belated remarks

Earlier Wednesday evening and after a day of astonishing silence, the Swiss Central Bank and the watchdog of the Swiss financial markets (Finma) assured that the bank’s finances were solid and met the strict criteria of banking regulations. . The central bank then said it was ready to let Credit Suisse access liquidity.if needed“. The two regulators also estimated “that there is no risk of direct contagion between the problems faced by certain banking establishments in the United States and the Swiss financial market“.

The central bank and Finma pointed out that Swiss banks are subject to “strict capital and liquidity requirements“, considering that Credit Suisse “satisfied» these requirements. They are higher for banks like Credit Suisse insofar as it is a so-called “significant” bank.systemic“.

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Small sentence big effects

It all started on Wednesday morning with a statement from the president of the Saudi bank. The bank has been Credit Suisse’s biggest shareholder, ever since it came to its rescue in November, with a stake of just under 10%. Ammar al-Khudairy said his bank only counted “absolutely notinvesting more in Credit Suisse, insisting the drag was mostly regulatory. Crossing the threshold above 10% would involve obtaining the approval of Finma, the market surveillance authority in Switzerland.

Although he said he was very satisfied with Credit Suisse’s restructuring plan, his remarks sparked a panic on the title in a market very worried about the risks of contagion after the bankruptcy of the American bank SVB. The stock lost up to 30% of its value during the session, reaching a new historic low of 1.55 Swiss francs, to finally close down 24.24%. This is the worst session in its history, the fall being even more marked than during the choppy sessions of the financial crisis of 2008.

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Beyond the Alps

The fall in Credit Suisse’s share price triggered movements far beyond the Swiss stock market on Wednesday. The Treasury Department said it was monitoring the situation and being in contact with its counterparts in other countries. “After yesterday’s extreme share price volatility, the Swiss authorities offered their support. This is a strong and important signal“Reacted Andreas Venditti, analyst at Vontobel in a market commentary. “We hope these measures will calm the markets and stop the negative spiraladded the analyst.

The stock has lost more than 87% of its value since the March 2021 bankruptcy of British financial company Greensill, which marked the start of a series of scandals that have weakened the bank.