Credit Suisse shares soared on Thursday following its announcement that it would borrow over $50 billion from the Swiss National Bank.
Shares soared up to 33%, a massive increase from Wednesday after shares declined 30% before settling at a 25% gain. The bank hit two all-time lows following the collapse of Silicon Valley Bank in the United States. While the two are not directly linked, the hit in Swiss bank stocks was amplified by investor fears regarding the California-based bank’s failure.
CREDIT SUISSE SHARES SLIDE 20% FOR SECOND ALL-TIME LOW IN SECOND CONSECUTIVE DAY
The drop in shares from Credit Suisse, the second-largest bank in Switzerland, dragged down other European banks’ shares, as well. On Thursday, European banks saw a slight recovery, with Euro Stoxx Banks rising up 1.6% and banks such as Commerzbank, Santander, UniCredit, and Raiffeisen all rising more than 2%, per the Associated Press.
Credit Suisse’s largest investor, Saudi National Bank, said on Wednesday it would not provide the bank with any further assistance. The next day, the Swiss bank accepted $53.7 billion in assistance from the Swiss National Bank hours after the offer was made.
“This additional liquidity would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs,” the bank said.
Credit Suisse Chairman Axel Lehmann said in a panel session Wednesday morning that an emphasis on de-risking the bank’s balance is underway and that the bank “already took the medicine” to reduce risks.
He said asking for government assistance in the future is “not the topic.”
“We are regulated. We have strong capital ratios, very strong balance sheet. We are all hands on deck,” Lehmann said. “So that’s not the topic whatsoever.”
Other U.S. banks’ stock shares are declining, as well as European shares. Dow Jones Industrial Average stock futures went down over 600 points. Citigroup and Wells Fargo each shed 3%, while Goldman Sachs and Bank of America fell 2% each.
Fears arose about the strength of financial institutions following Silicon Valley Bank’s collapse last week after the bank suffered a nearly billion-dollar negative cash balance. The Federal Reserve, Justice Department, and Securities and Exchange Commission are investigating and reviewing the bank’s failure.
Treasury Secretary Janet Yellen is testifying before the Senate Finance Committee on Thursday and is expected to reassure Congress that the U.S. banking system “remains sound” following a week of financial turmoil.
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“I can reassure the members of the committee that our banking system remains sound and that Americans can feel confident that their deposits will be there when they need them,” according to Yellen’s prepared remarks transcript.
“This week, the government took decisive and forceful actions to strengthen public confidence in our banking system,” Yellen is expected to say, referencing the Treasury Department’s work with the Fed and the Federal Deposit Insurance Corporation to protect all depositors.
