Shares of major European banks fall due to Credit Suisse crisis

(Patria) - Following the collapse of the American bank Silicon Valley from California, turmoil on the stock markets continues.

Investors were shaken by the announcement of Saudi investors that they can no longer participate in the recapitalization of the Swiss banking giant Credit Suisse.

Fell to the lowest level

The value of the shares of this Swiss bank immediately fell by more than 23 percent, to the lowest level in history. Shares of all major European banks also fell.

This bank found itself in trouble after a series of scandals, losing the trust of numerous investors and clients. In the last three months of 2022, its clients withdrew more than 110 billion francs.

The statement by their largest shareholder - the Saudi bank - that the Swiss do not expect his financial assistance, added fuel to the fire.

- The answer is absolutely no, for many reasons. I will state the simplest one, which is regulatory and statutory. We now own 9.8% of the bank, if we exceed 10%, new rules come into effect, whether prescribed by the Saudi, European, or Swiss regulator. We are not inclined to enter a new regulatory regime - said the Chairman of the Saudi National Bank, Ammar Al-Khudairy, to Bloomberg.

The European Central Bank (ECB) has contacted systemically important lenders in the eurozone to question them about Credit Suisse's exposure, Reuters has learned from two sources in the ECB's supervisory mechanism.

One of the sources emphasized that Credit Suisse's problems, in their opinion, are specific to the Swiss bank and are not systemic in nature.

Credit Suisse lost more than 7 billion Swiss francs last year, the most in 15 years. In addition, investors withdrew more than 120 billion francs in the last three months.

Thousands of layoffs

Management recently admitted that it did not recognize potential risks in time. Thousands of employees were laid off.

- Credit Suisse faced a huge outflow of client funds. In the fourth quarter of 2022 alone, net outflows of 110 billion euros were recorded.

This bank is as large as the banks in the US that were recently closed. It is systemically important for Switzerland, but also very important internationally. The bank Credit Suisse is too big to fail - believes Dorothee Holz from the Frankfurt Stock Exchange.

When the share price of a bank falls by a quarter in a single day, as happened to Credit Suisse yesterday morning, which is also the lowest level in the bank's history, panic sets in.

There are fears that huge deposit outflows could push Credit Suisse into bankruptcy. However, management claims that this is not the case now, as there is enough cash for payments.

- Struggling European banks are reportedly being scrutinized more critically now. This banking crisis came from America. Many believe that all of this could cause problems in Europe as well.

If a bank had even the smallest problem in the past, if major investors say they no longer want to invest and inject new money into Credit Suisse bank, then many other investors say - we want out of everything, and then it smells a bit like the collapse of the investment bank Lehman Brothers in 2008. Central banks must intervene now - said Robert Halver, chief investment strategist at Baader Bank.

- European banks, due to strengthened supervision, are much stronger and cope much better with financial pressure - said Spanish Prime Minister Pedro Sanchez, trying to calm the crisis caused by the fall in Credit Suisse's share price.

However, the problems of the second largest Swiss bank, which also operates in the eurozone market, immediately affected European stock exchanges. The share prices of major French and German banks such as BNP Paribas, Societe Generale, Commerzbank, and Deutsche Bank fell between 8% and 12%, reports Hina.