Five days after the bankruptcy of the American bank Silicon Valley Bank this Wednesday, March 15, another problem arose in the banking market. Sector giant Credit Suisse is indeed in turmoil after its main shareholder, the National Bank of Saudi Arabia, ruled out any increase in its stake in the second Swiss bank. “The answer is absolutely no,” its chairman, Ammar al-Khudairi, told Bloomberg TV, “for several reasons that are both regulatory and legislative.” And if the one from Credit Suisse, Axel Lehmann, said that his institution did not need help, the announcement had a devastating effect: on this Wednesday, the bank’s shares lost up to 23.6%.
Swiss lender default concerns
I must say that Credit Suisse is not doing very well. Last November, the bank began a massive restructuring that saw it turn to a Saudi shareholder. Then, in February, it posted a CHF 7.3 billion loss for fiscal year 2022, raising fears of the worst. According to finance news agency Bloomberg, the cost of insurance against the risk of default by a Swiss bank has more than tripled in three days. The weaknesses of this heavyweight of the European financial sector are falling on his colleagues.
This Wednesday, the shares of the banks of the Old Continent recorded losses exceeding 60 billion euros. By the end of the day, BNP Paribas was down 11.11%, Société Générale was down 11.01% and Commerzbank was down 10.08%. These poor results weighed heavily on European stocks, which fell sharply on Wednesday. For example, the CAC 40, which fell more than 3.5%, hit its lowest level since January 10th.
This atmosphere of fear can also be explained by the failure of two banks in the United States. Those in a few days, the US banks Sillicon Valley Bank and Signature, which became respectively the second and third worst bankruptcies in the history of the country. During this time, the CAC 40 performed very well, but the wind blowing from across the Atlantic, coupled with the clumsy statements of the main shareholder Credit Suisse, made everything shake.