Following the shock of Silicon Valley Bank (SVB) bankruptcy, the liquidity crisis of Credit Suisse, the second largest bank in Switzerland, has erupted, causing the US and European stock markets to drop at once.
In particular, European stock markets plunged more than 3% in major countries.
◇ U.S. stock market excluding Nasdaq declined all at once
: On the 15th (local time), the news that Credit Suisse is experiencing a liquidity crisis led to a drop in the US stock market, except for the Nasdaq.
On the New York Stock Exchange that day, the Dow and S&P 500 fell 0.70%, while the Nasdaq rose slightly (0.05%).
This is because of the Credit Suisse shock. Saudi National Bank (SNB), which currently owns 9.88 per cent of Credit Suisse, said it would no longer buy shares in Credit Suisse, which is experiencing a liquidity crisis, citing regulations.
Ama Al Qureira, the bank’s president, said, “We cannot exceed 10 percent of a bank’s stake as a rule.” “There will be no further support,” he said.
Credit Suisse has been experiencing a liquidity crisis since the second half of last year due to deposit withdrawals by customers.
Credit Suisse’s stock plunged nearly 14% on the US stock market on the news. On this day, the bank’s share price plunged 13.94 percent to $2.16 on the New York Stock Exchange.
The plunge in Credit Suisse’s share price has reignited investor anxiety about the health of the banking system following the SVB’s bankruptcy.
As Credit Suisse’s share price plummeted, so did the stocks of large American banks. JPMorgan Chase and UBS Group plunged 4.71% and 6.40%, respectively. As a result, the S&P 500 financial index closed down 2.84%.
◇ All major European stock markets plunged more than 3%
: European stock markets, which closed earlier, also plunged all at once. Germany’s DAKS plunged 3.27%, Britain’s FTSE 3.83%, and France’s Caag 3.58%. The pan-European Stoxx 600 fell 3%.
European banking stocks in particular fell 7%. This is the biggest drop since Russia launched a full-scale invasion of Ukraine on February 24, 2022.
Credit Suisse’s stock plunged 24% on the Swiss stock market. In the middle of the day, it even collapsed by 30%.
As the bank collapsed, the stock prices of European companies such as BNP Paribas, Soiete General, and Commerzbank also plummeted. As a result, the entire European stock market fell at the same time.
◇ Swiss Central Bank “will provide liquidity”
: The Swiss Central Bank said that Credit Suisse is currently well capitalized but will provide additional liquidity if needed.
The Swiss central bank issued a joint statement with the Swiss Financial Markets Supervisory Authority (FIINMA) on the same day, announcing that Credit Suisse “meets the capital and liquidity requirements imposed on important banks, but if the situation changes, central bank intervention will be warranted.”
However, the announcement did not stop the sharp decline in US and European stock markets.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.