Credit Suisse, after the great fear, the ECB questions the rates
The context and condition of Credit Suisse are very different from those of the Silicon Valley Bankwhose deposits, in any case, have in the meantime been secured by the US Treasury and the Fed. After yesterday’s fear, with the EU markets burning 355 billion and Milan losing 4.6%today the day opens with the rebound linked to the good news of the intervention of the Swiss Central Bank.
The latter, in fact, will lend up to 50 billion Swiss francs, or about 54 billion dollars, to the Swiss bank which will buy back its senior debt for 3 billion francs. Credit Suisse shares are also benefiting, starting today with a recovery of 40% at 2.38 francs, after sinking yesterday to 1.7. The help from the central bank comes in the context of a covered loan facility and a short-term liquidity facility, in practice it is additional liquidity that is used to support the businesses and customers of Swiss credit.
The sell-off had abated, despite the reassurances of the institute’s top management, after the Saudi National Bank, the main shareholder with the 9.8%, had announced that it did not want to participate in the new recapitalization of the subsidiary, as it could not go beyond the 10% stake (Swiss law does not allow it except through a preventive go-ahead from the federal supervisory authority). It must be said that the Arab institute had already put 1.5 billion on the plate in the capital increase from 4 billion last fall.
Furthermore, 24 hours earlier Credit Suisse had announced that its auditor, PwC, had identified “substantial weaknesses” in financial reporting controls. At that point the storm began which immediately involved European and American bank stocks. However, the 24.24% collapse of the Swiss bank is only the latest stage in a sort of descent into hell, given that just a year ago the shares were worth over 7 francs each.
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