A new feeling of general concern hovered on Wednesday, March 15, on the Swiss financial center, quickly winning all over Europe, as the share price of the bank Credit Suisse sank to new lows.
“Until then, Swiss banks were synonymous with zero risk. We trusted them with our eyes closed. With the difficulties of Credit Suisse, this notion no longer has any place and it is in itself a real turning point., summarizes a Geneva financial analyst, who prefers to remain anonymous. The title of the second Swiss bank recorded in session the worst fall in its history, on the Zurich Stock Exchange, closing down 24.24% at 1.697 Swiss francs (1.73 euros), after a movement of panic and a frenetic exchange of nearly 500 million shares.
Trigger of the earthquake, a harmless position of the first shareholder of Credit Suisse, the National Bank of Saudi Arabia (SNB). It will have been enough of a sentence pronounced by Ammar Al-Khudairy, the president of the SNB, to cause the quarry. “We rule out injecting more funds”he told Bloomberg TV, when asked how far the Saudis were willing to support the Zurich-based bank.
In October 2022, the latter had taken a 9.8% stake at a cost of 1.5 billion Swiss francs, flying to the rescue of the Swiss establishment then in full recapitalization after a grueling series of international financial scandals (Greensill, Archegos, internal espionage cases).
With the continuous decline in the stock market in recent weeks, and before Wednesday’s plunge, this block of shares had already lost a third of its value, and the Saudi investor now intends to limit the costs. That was all it took to swell market rumors already making Credit Suisse the next Lehman Brothers, the Wall Street investment bank whose bankruptcy in September 2008 triggered the global financial crisis.
“Too big to fail”
Anxious to calm the growing international concern, the two Swiss regulatory bodies came out of their torpor on Wednesday evening to publish – outside office hours, something extremely rare in the Confederation and proof that the matter is quite serious -, a joint press release in the form of a firewall.
The Swiss National Bank (SNB) and financial market “policeman” Finma said that ” Swiss credit (satisfied) capitalization and liquidity requirements applicable to systemically important banks”. On the night of Wednesday to Thursday, Credit Suisse nevertheless announced a loan of 50 billion francs from the SNB. The bank, at the same time, mentioned a series of debt buyback operations for around 3 billion Swiss francs.
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