Banking Crisis Worsens: Swiss Bank is First “Too Big to Fail” Bank to be Bailed Out as Saudis Withdraw Support

 

by Brian Shilhavy
Editor, Health Impact News

Switzerland’s second largest bank, Credit Suisse, which has been experiencing bank runs and plummeting stock valuations since the end of 2022, became the first SIFI (systemically important financial institution), or “too big to fail” bank, to crash today forcing regulators to step in and ensure a bailout.

The Saudis almost single-handedly crashed the U.S. Stock Market (and stock markets around the world) this morning when they announced that they were not going to put any more money into the failed Swiss bank.

Problems at Switzerland’s second-biggest lender are causing stocks around the world to falter—and reigniting fears for the banking sector.

On Wednesday, Credit Suisse ‘s top shareholder said in a Bloomberg interview that it wouldn’t invest additional money in the Swiss bank. Saudi National Bank Chairman Ammar Al Khudairy told the media outlet that taking a stake of more than 10% in Credit Suisse would trigger regulatory complications.

That pushed shares of Credit Suisse to a new low on Wednesday. The stock closed down 24% in Zurich and its American depositary receipts (CS) were down 25% in U.S. trading. (Full article.)

While the U.S. Stock Market did end lower today, it most assuredly would have been a blood bath if Swiss Regulators had not stepped in to ensure the world that it was going to bail out their troubled bank. This was after European markets had closed, however, and European banks’ stock values lost 7% at end of trading in Europe today.

Swiss National Bank Issues Statement: “Will Provide Liquidity If Necessary”

Summary: 

Saudis fold – refuse to throw any more money at Credit SuisseCredit Suisse stock hits record lowCredit Suisse 1Y CDS explodes as counterparty risk hedging soarsCredit Suisse execs urged a “show of confidence” from the Swiss National BankECB quantifying exposures to Credit SuisseUS Treasury monitoring situation, talking with other regulatorsFed working with UST to quantify exposuresOne major govt is pressuring Swiss to interveneSystemic risk threat spreads globallySwiss authorities seeking to stabilize bankSwiss National Bank and Finma issue statement of support

The Swiss National Bank and the country’s regulator said Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks and that the SNB will provide the bank with liquidity if necessary, in a statement. (Full article.)

Since a simple statement made by Saudi National Bank Chairman Ammar Al Khudairy almost crashed the entire world’s financial system today, what does that tell you about the frailty of the current banking system?

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Via https://healthimpactnews.com/2023/banking-crisis-worsens-swiss-bank-is-first-too-big-to-fail-bank-to-be-bailed-out-as-saudis-withdraw-support/