Silicon Valley Bank, Credit Suisse… is the contagion there?


Alexander Boero

March 20, 2023 at 12:45 p.m.

3

UBS Credit Suisse © Shutterstock

© Shutterstock

Several banks have fallen in recent weeks, the latest being Credit Suisse, raising fears for the worst in the banking sector, which does not want to suffer a financial crisis.

The banking world is shaken as rarely in this month of March. Bankruptcy of Silicon Valley Bank (SVB) and liquidation of Silvergate Bank, plummeting then takeover by UBS of Credit Suisse, European and Asian stock markets suffering. But what is happening in the banking sector? And should we fear a contagion that would go so far as to affect French establishments? The authorities want to be reassuring.

A black month of March for the banking sector

Since March 8 and the liquidation of Silvergate Bank, red signals have piled up, and the fall of SVB has not put an end to concerns. In recent days, the fourteenth largest American bank, the First Republic, has also lost its footing, until several banking behemoths from the United States came to its aid. Insufficient momentum, the establishment having lost 80% of its value in the space of a week.

On the side of Europe, Credit Suisse has been chaining bad news since the beginning of the month. We are talking here about the number 2 in Switzerland, which has suffered in recent days the loss of one of its reference shareholders, and the scathing statements of its main investor, the Saudi National Bank, indicating on March 17 that it was important not to recapitalize the bank if it were to be hit by a financial problem.

The same day, its action collapsed, in a context where the market became particularly nervous, because heckled by the setbacks of the establishments across the Atlantic of which we spoke. But these tensions alone do not explain the rout of Credit Suisse, considered the weak link in the Swiss banking system for several years. In a rush and to try to preserve the confidence of global investors, the leading Swiss banking group, UBS, announced on Sunday March 19 the takeover of its rival, for a pittance.

Credit Suisse, second Swiss bank, bought by its rival and leader

The amount of the redemption of Credit Suisse amounts to 3 billion euros (the establishment weighed 3 times more Friday evening at the close of the Stock Exchange), a sum payable in UBS shares, which makes it possible to create a giant among the giants of $5 trillion in invested assets. The Swiss Central Bank has also announced that it will grant aid of up to 100 billion Swiss francs (almost 100 billion euros), in the form of cash.

money purse © Pexels / Anna Tarazevich

© Pexels / Anna Tarazevich

The takeover did not initially have the desired effect. Monday morning, the European stock markets sometimes plunged up to 6 or 7%, before returning to the green at the end of the morning. It is obviously more difficult for UBS and Credit Suisse shares. This Monday at 12 p.m., the action of the acquired establishment plunged by 60% (to 0.75 cents per share), nevertheless stable since 9:20 a.m. As for UBS, its price fell sharply at the opening, before recover and reach, at noon, 16.50 Swiss francs (17.20 at opening).

I am happy with this agreement, it is a good agreement “, reacted the French Minister of the Economy Bruno Le Maire, with our colleagues from BFMTV on Monday morning. But vigilance is required, even if the Governor of the Banque de France insisted, for his part, to say that French banks are not affected by the problem of Credit Suisse.

Source: Clubic, Reuters, BFM-TV



Source link -99