Latest SVB collapse: Credit Suisse borrows £44.5bn after collapse amid fears of economic crisis

James Moore wrote this week:

Exactly what we need now: another banking crisis. But after the bloodbath earlier in the week, a rally quickly got going. Regional banks in the United States – which are at real risk of seeing a rush on their deposits while larger peers benefit from inflows – found some support.

Perhaps Wall Street’s nail biters had figured out that this was doomed Silicon Valley Bank (SVB) had a rather unique financial and customer structure. The same goes for New York-based lender Signature, which shut down over the weekend. Federal Reserve intervention appears to have helped calm nerves.

Credit Suisse plans to borrow up to £44.5 billion from Switzerland’s central bank to boost its liquidity and reassure investors.

Credit Suisse collapsed, dragging other major European lenders into the abyss in the wake of US bank failures.

Shares of the lender fell about 30 per cent to around £1.42 before posting a 24 per cent loss at £1.51 at the close on the SIX stock exchange.

At its low, the price was down more than 85 percent from February 2021. “This additional liquidity would support Credit Suisse’s core business and clients as Credit Suisse takes the necessary steps to create a simpler and more client-centric bank,” the bank said.

The borrowing will be made under the covered credit facility and a short-term liquidity facility and will be secured by high-quality assets, according to Credit Suisse.

A bank run conjures up images of It’s a Wonderful Life, with anxious customers crammed shoulder to shoulder, desperately begging a harried George Bailey to hand over their money.

The collapse of the Silicon Valley bank last week had the panic but few other similarities, rather than taking place on Twitter, message boards, cell phones, and bank websites.

What made the Silicon Valley bank collapse unique compared to previous large bank collapses was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise fresh capital; As of Friday morning, it was insolvent and under government control.

On Monday, the UK government said HSBC would take over the UK wing of the bank.

But what was the SVB, why did it collapse and are other banks at risk? We’re going to look at these questions here.

Fears that the economy could be on the brink of another “2008-style crisis” sent shares in Europe’s top banks tumbling, dragging London’s FTSE 100 to its lowest level this year.

Troubled bank Credit Suisse fell by up to a quarter to a new record low, prompting its shares to be temporarily suspended from the Swiss market.

Investors were rocked by the collapse of the US Silicon Valley Bank (SVB) over the weekend, raising concerns about the viability of the too big to fail Credit Suisse.

The Dow Jones Industrial Average ended 280 points (0.87%) lower on Wednesday, dogged by concerns about the future of Credit Suisse, which has a strong US and international presence beyond its home base in Switzerland.

The S&P ended the day down 0.7% at 3,891.97 and the Nasdaq Composite managed to climb 0.05% at 11,434 by the close.

At one point, the Dow was down 725 points and the S&P briefly saw all of this year’s gains wiped out.

There was a rebound of sorts in the afternoon when Swiss regulators announced that the country’s central bank would provide liquidity to Credit Suisse if needed, which helped ease earlier concerns when Reuters reported that the Saudi National Bank, the largest Investor of the institution said that this is possible. t provide further funding.

Credit Suisse previously said it had identified “certain material weaknesses in our internal control over financial reporting” for 2021 and 2022.

Fears about the bank’s future stem from the crisis that hit US regional banks following the collapse of Silicon Valley Bank and Signature Bank over the weekend.

Troubled Credit Suisse shares lost more than a quarter of their value on Wednesday, hitting a record low after its largest shareholder – the Saudi National Bank – told outlets it would not inject any more money into the troubled Swiss bank.

The turbulence in Credit Suisse’s share price led to an automatic trading pause in the bank’s shares on the Swiss market and pushed the shares of other European banks down by up to double digits. This fueled new fears about the health of financial institutions and worries about middle-market lenders following the collapse of Silicon Valley Bank in the US.

Credit Suisse shares fell more than 27% to around 1.6 Swiss francs on Wednesday afternoon on the SIX bourse. That is more than 85% less than in February 2021.

A bank run conjures up images of It’s a Wonderful Life, with anxious customers crammed shoulder to shoulder, desperately begging a harried George Bailey to hand over their money.

The collapse of the Silicon Valley bank last week had the panic but few other similarities, rather than taking place on Twitter, message boards, cell phones, and bank websites.

What made the Silicon Valley bank collapse unique compared to previous large bank collapses was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise fresh capital; As of Friday morning, it was insolvent and under state control.

At 2 a.m. Monday morning, he shot a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to avoid panic.

The United States needs “strong legislation” on banking regulation, Senate Majority Leader Chuck Schumer said Wednesday, “hopefully” something bipartisan.

Schumer made the comments in response to a question about whether he would support legislation led by Democratic Sen. Elizabeth Warren that would restore banking regulation and oversight under former President Donald Trump.

He declined to say if he would support the bill, insisting he had faith in President Joe Biden, Treasury Secretary Janet Yellen and the Federal Reserve.