A return to calm, no doubt temporary. After a lower opening, most European banking stocks ended in positive territory on Monday March 20, erasing most of the losses suffered during the previous session: the Parisian CAC 40 index regained 1.27%, while such as the European banking sector. In Zurich, UBS, which fell 16% in the morning, closed with a gain of 1.3%. And Wall Street ended in the green, the flagship Dow Jones index taking up 1.2%.
However, it is too early to declare the cessation of the yo-yo movement observed for a week. Because if the threat of a fall of Credit Suisse, one of the thirty “systemically” important banks in the world, has for the moment been ruled out, the doubts it has propagated about the solidity of global finance are difficult to dispel.
Especially since the conditions of the rescue of Credit Suisse have provoked strong criticism and sown confusion on the risks associated with the file. In question, the choice of the Swiss authorities, to facilitate the takeover of the group by UBS, to sacrifice the holders of so-called AT1 bonds (“additional tier one”), securities nicknamed “CoCos”, convertible under conditions into shares to strengthen the balance sheet in the event of difficulty.
Bern’s questioning of their priority status will result in deadweight losses of 16 billion Swiss francs (i.e. as many euros) for Credit Suisse’s creditors, while the bank’s shareholders will not lose all of their investment. And it has raised fears in other countries that large investors will be forced to post losses in their accounts.
Persistent doubts
Visibly irritated and anxious to ease the tension, the main banking authorities of the European Union (EU) issued a joint communiqué to reaffirm that, in the EU, AT1 bonds remained favored over the “ordinary” capital of the bank in the event of losses.
In France, the insurer Axa is the only major group to have specified its exposure to the Credit Suisse file: it is nil for AT1 securities and around 600 million euros for the less risky bonds issued by the bank.
The Single Resolution Board (SRB), the European Banking Authority and the European Central Bank (ECB) therefore ensure: “This approach has been consistently implemented in the past and will continue to guide the action of the SRB and ECB Banking Supervision during crisis response. » More directly, the former vice-president of the ECB, Vitor Constâncio, estimated on Twitter that the Swiss authorities [avaient] made a mistake, with consequences and possibly many legal remedies”.
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