4.25pm ET: Swiss central bank ready to help
Swiss regulators have said they are ready to help Credit Suisse "if necessary", as the collapse of Silicon Valley Bank in the US raises fears of a wider crisis.
In a joint statement with the Swiss financial market regulator FINMA, the Swiss National Bank (SNB) said Credit Suisse met the “strict capital and liquidity requirements” imposed on banks of importance to the wider financial system.
The comments from the Swiss National Bank came after shares in Credit Suisse plunged more than 30% to a record low.
“If necessary, the SNB will provide CS with liquidity,” they said.
12.27pm: Credit Suisse failure would be a ‘whole other world of pain’
As markets slide following Credit Suisse’s temporary trading halt, Neil Wilson, chief market analyst Finalto, has warned of a “whole other world of pain” if the Swiss bank “were to run into serious existential trouble”.
Trading has resumed for Credit Suisse and other banks that have seen their shares plummed today, but the markets are still coming to grips with the crisis that started with Silicon Valley Bank’s collapse in the US.
Credit Suisse was 25% down at the time of writing, while Société Générale, which was also temporarily halted, was down 12.5%.
Market sentiment accrued in 2023 “just seems to have evaporated” said Wilson, with the FTSE 100, DAX and France’s CAC index posting steep daily losses.
12.11pm: ‘Nervousness in palpable’ amid European banking rout
Europe’s banking sector remains gripped by crisis as market valuations of the continent’s major banks continue to plummet.
Susannah Streeter, head of money and markets at Hargreaves Lansdown commented: “The banking rout has taken on another ominous twist with trading halted in shares of big European banks including Credit Suisse, Société Generale, BNP Paribas, Monte dei Paschi and UniCredit.”
Trading resumed around midday, but circuit breakers could kick in throughout the day.
“The fresh banking sell-off has taken hold as fears rise to the surface about the robustness of the sector with the shadow of the SVB collapse still looming large,” said Streeter.
Questions over market contagion following SVB’s collapse persist.
While SVB was a mid-sized player in international finance, its liquidity crisis exposed a potential flaw in the wider banking system
“The worry is that banks sitting on large unrealised losses in their bond portfolios might not have sufficient buffers if there is a fast withdrawal of deposits. Although the biggest players are judged not to be at risk, thanks to the chunky layer of capital they are sitting on and the stable nature of their deposits, the nervousness is palpable,” explained Streeter.
11.56am: Credit Suisse back online, but chaos persists
Shares in Credit Suisse, Société Générale and numerous Italian banks were temporarily suspended this morning after valuations across the European banking sector took a nosedive.
‘Circuit breakers’ appear to be kicking in, which are a regulatory mechanism that temporarily halts trading in a particular stock if it falls to predetermined threshold.
Volatility should be expected throughout the day.
Chief investment officer Naeem Aslam at Zaye Capital Markets said: “The financial sector in Europe is under significant turmoil today as a result of the SVB’s fallout. It was pretty much given that European banks were going to face issues as well, and today, Credit Suisse is in focus.
“Traders are worried if Credit Suisse will be able to survive given that its stock has fallen below the two-handle level today, and if it doesn’t, how big the crisis is going to be.”
11.40am: Credit Suisse investors have ‘right to worry’
Neil Birrell, chief investment officer at Premier Miton, told the Financial Times that nervous investors “were right to worry” about Credit Suisse following the collapse of Silicon Valley Bank.
“These aren’t all isolated cases, the fear of contagion is clear,” he said. “Credit Suisse has been in a somewhat shaky state for some time, it’s not surprising you’ve got people running for the hills.”
Credit Suisse was suspended from trading in Zurich after shares fell 20% to an all-time low of less than two Swiss francs.
11.25am: Europe bank shares plummet
The Europe-wide STOXX Europe 600 Banks Index EUR is down 6% 144.74 as the banking crisis begins to take hold.
Credit Suisse shares have been suspended after hitting an all-time low of less than two Swiss francs.
Society Generale shares have dived over 10% with sources including Evening Standard reporting a trading suspension, though shares appear active at the time of writing.
Sources are also reporting that Italian banks Monte dei Paschi and UniCredit have also halted trading.
11.05am: Credit Suisse suspended
Credit Suisse Group has been suspended from trading after shares plummeted 20% to a record low on Wednesday.
Shares fell below two Swiss francs (180p) amid market contagion fears following SVB’s collapse.
Saudi National Bank’s chairman (Credit Suisse’s largest investor) Ammar Al Khudairy ruled out injecting further funds into Credit Suisse if there was another call for additional liquidity.
Al Khudairy told Reuters that Saudi National Bank cannot provide the Swiss bank with more financial assistance, saying: “We cannot because we would go above 10%. It’s a regulatory issue.”
More to come…