Credit Suisse, now the ECB wants to see clearly. At least, so it seems. To the point that, according to some rumors, the supervisory authorities of the ECB, responsible for supervising the banks in the Eurozone, would have contacted the credit institutions of the bloc to have information on their financial exposure to the Swiss giant.
It was first of all to report the rumors il Wall Street Journal, citing sources close to Frankfurt.
It is not for nothing that Piazza Affari went on stage the Caporetto of Italian banks: UniCredit closed down more than -9%, Intesa SanPaolo slipped 6.85%, Banco BPM dropped -7.13%, Bper closed down 7.23%.
Out of the main list Mps Monte dei Paschi of Siena, which at the beginning of the year had collected strong rallies benefiting from the various bets on a bank risk in Piazza Affari, has confirmed itself as the weak link of Italian banks, suffering from a tumble of more than 10%.
The bloodbath did not spare other European banks.
The domino effect of collapse of Credit Suisse, which closed down 24% after slipping to more than 30% at its tested intraday lows on the Zurich Stock Exchange was more than evident.
On the Paris stock exchange BNP Paribas lost more than 10%, Société Générale has sunk by more than 12%the Germans Commerzbank and Deutsche Bank closed the session on the Frankfurt stock exchange with tumbles of more than 8%.
Fear could not fail to infect even the big names on Wall Street: the sales have returned to attack not only the securities of the regional banks – which, thanks to the moves of the insiders, had managed to resurrect, armored by the respective shopping of their CEOs – but they have also besieged Wall Street giants of the caliber of JP Morgan, Goldman Sachs, Citigroup.
No time to recover from the shock of Silicon Valley Crash, the largest bank failure since Washington Mutual in 2008, not even the time to digest the thesis according to which, after all, the comparison between Svb and Lehman Brothers perhaps had no reason to exist: on the markets, which were starting to digest the Silicon Valley Bank crimefears have exploded for the fate of Credit Suisse, a giant of the systemic world.
Perhaps, la vera Lehman Brothers. Other than Svb, or the crypto banks blown up too, that is Silvergate e Signature Bank.
Difficult, if not impossible, to be able to escape the sells. And so the Ftse Mib of Piazza Affari, particularly exposed to bank stocks, has closed the session with a crash of almost -5%.
The London Stock Exchange (-3.8%), Frankfurt -3.27%, Paris -3.58% was also under attack: practically all of Europe, with the benchmark Stoxx 600 index retreating by around 3%.
Ma Piazza Affari was, precisely, the worst.
The Credit Suisse drama unfolded all over the world while the top management of the Swiss giant strove to highlight the solidity of the bank which, in a post on Twitter, Dr. Doom Nouriel Roubini he defined “too big to fail and too big to save”speaking precisely of Lehman Momenti.
A bank of which, due to the accounting chaos that characterizes it, nor is it possible to know, as Roubini wrote again, the amount of unrealized losses on financial instruments and other assets.
In short, a giant bank, but despite this not at all transparent, whose history is studded with scandals and requests for information from authorities around the world.
Six days ago, Credit Suisse communicated to the markets the need to postpone the publication of the 2022 accounts, after the call from the SEC, the US stock market authority.
In a press release, the giant referred to an interlocution with the SEC, which had objected to the “technical evaluation of some revisions, previously communicated – announced Credit Suisse – relating to communications on consolidated cash flows for the year ended 31 December 2020, and for 2019″.
The SEC had also turned the spotlight on the “related controls” implemented by the institution.
As a result, the Swiss giant made known the decision of the top management to postpone the publication of the accountsper “understand more accurately the comments received”.
The picture turned more dramatic yesterday, with Credit Suisse admitting it had spotted “significant weaknesses” in the control processes activated on the 2021 and 2021 accounts.
Shares continued to tumble on the Zurich Stock Exchange, hitting new lows, along with the prices of some bonds.
The real bombshell has been dropped in the last few hourswith the slap even coming from the main Saudi shareholders of Credit Suisse.
We are talking about the bank’s first shareholder, the Saudi National Bank (SNB), which has clearly said it will not inject further cash into the Swiss giant.
“We can not, because we would go above 10%. This is a regulatory issue – said the president of the Saudi bank Ammar Al Khudairi during an interview given to the Reuters agency.
Having said that, the manager made it clear that Saudi National Bank is satisfied with the restructuring plan initiated by the Swiss giant, adding that, in his view, the bank is unlikely to need additional funding.
Saudi National Bank, it should be remembered, took over a stake in Credit Suisse pari al 9,9%, through the capital increase worth $4.2 billion launched by the institute.
“I don’t think they will need more money; if you look at their ratios, they’re fine. Also (the bank) operates following robust regulatory regimes of Switzerland and other countries“, said Ammar Al Khudairy again, on the sidelines of a conference held in Riyadh, Saudi Arabia.
At a time when the Silicon Valley Bank case has already triggered a crisis of confidence in the banks, but the markets have not withstood the blow, also thanks to some comments from analysts.
“If regulators do not handle Credit Suisse well, there will be backlash across the (banking) industry,” warned Joost Beaumont, head of the banking research division of the Dutch ABN Amro. “Making the situation worse is the fact that both sides of the Atlantic have problems affecting the banks.”
The panic over the fate of Credit Suisse has been paid for, again, come on cds – credit default swap – contracts to insure against the default risk of bonds, in this case issued by the Swiss giant.
In particular Bloomberg reported that “CS 1-year credit default swaps rose to 835.9 basis points,” indicating the risk of further increases. The agency recalled that “a CDS level at 1000 would be a source of serious concern”.
Alla BBC Andrew Kenningham of Capital Economics he also summarized the doubts of the markets:
“Credit Suisse’s issue once again raises the question of whether this is the beginning of a global crisis or just another idiosyncratic case” (like that, as defined by Silicon Valley Bank).
Of course, Credit Suisse, while shocking the markets these days, cannot be considered a shock case like that of Silicon Valley bank.
His problems have long been known. What about, for example, the decision of the Credit Suisse clients to withdraw up to 84 billion Swiss francs, or the equivalent of $88.3 billion, news communicated at the end of November last year, which sanctioned the attack on the division of wealth management?
Someone commented:
“Very wealthy customers don’t want to look stupid by keeping most of their money in a bank that is unable to manage its business to the point where it cannot make a profit.”
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And of Lehman Moment for Credit Suisse, there was actually talk too in early October 2022, when the spreads of Credit Suisse’s CDS (CDS-credit default swaps, or insurance contracts to protect themselves from the risk of a possible bankruptcy, default, of the bonds), marked yet another strong boom.
Those were days when Charlie Gasparino of Fox Business reported that “CEO Ulrich Koerner was meeting with “large institutional investors, concerned about the bank’s precarious financial condition, with the aim of reassuring them that the bank had solid capital and solid liquidity. ”. A few weeks later, the bank launched a maxi capital increase, which made the Saudis of Saudi National Bank its first shareholders. Even earlier, in June 2022, the bank issued a profit warning, citing the war in Ukraine and the rate hike phase.
And what about Credit Suisse’s accounts horribilis in 2021, when the giant was overwhelmed by gambling finance discounting the collapse of funds linked to Greensill and the $5.5 billion trading loss linked to the implosion of the Archegos investment fund ?
Credit Suisse was in particular confirmed as the most exposed bank, among those that they had financed the crazy bets of the Archegos fund (other names include Goldman Sachs, Nomura, Morgan Stanley).
The fund had collapsed by the time he failed to meet the margin calls presented by the same banks that, towards the end of March 2021, had begun to bombard Archegos with requests for greater guarantees, aware of how its bets were not going as hoped. A bullish bet, that of the hedge fund launched by Bill Hwang (among other things known for having made a mea culpa, years earlier, in an insider trading case involving another fund he managed at the time, Tiger Asia Management), which ended very badly.
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