Credit Suisse: the bank considered “too big to fail” that fell 30% on the stock market

The Credit Suisse bank experienced its blackest day yesterday and in 167 years of history, suffered its greatest stock market punishment, dragged down by a general distrust in the banking sector after the bankruptcy of three entities in the United States, a situation that has found it weakened by its lousy results and several scandals.

Financial analysts in Switzerland consider, however, that the atmosphere of panic that prevailed yesterday – with global repercussions and particularly in Europe – has been excessive since the second bank in the country has characteristics that fundamentally differentiate it from the bankrupt US regional banks .

Despite this, the bank lived a nightmare on the Zurich Stock Exchange, where it is listed, and its shares lost 30% of their value to then rise slightly and close with a fall of 24%, which has placed the price of the title at 1.7 Swiss francs (1.74 euros), when they had never been below 2 francs.

In the context of the 2008 financial crisis, the bank was classified “systemically important” (“too big to fail”) for the Swiss economy, which meant the imposition of a series of very strict regulations regarding own funds and the level of liquidity, with which it is up to date.

At the same time, current legislation guarantees it either stabilization, consolidation or an orderly liquidation in the event of extreme hardship, a lesson drawn from the 2008 crisis, when the Swiss state and the Swiss National Bank (SNB) ) had to rescue UBS bank, the most important in the country by market value.

On Thursday, Credit Suisse announced that it will take out a loan of up to 50 billion Swiss francs ($53.7 billion) from the Swiss central bank to “strengthen” To the group.

In Europe, regulatory demands are generally much higher than in the US, where the Barack Obama government (2009-2017) reinforced them after the debacle of its banks with the 2008 financial crisis, but then they relaxed again during the presidency of Donald Trump (2017-2021).

The main victim

Weakened by its disappointing results and its inability to regain lost confidence, Credit Suisse has so far been the main victim outside the United States of the earthquake that has caused its banking system to close three banks, including the one of choice for the burgeoning and young American technology companies.

For Credit Suisse, the worst blow of the day came from its main shareholder, the Saudi National Bank, that after indicating that he was satisfied with the bank’s measures to clear up his accounts and return to the course of growth, he clarified that he is not willing to increase his current investment in the establishment, which is 9.88% of its shareholders.

The president of the investing entity told Bloomberg that it is not willing to enter into a new regulatory system (both at the level of Switzerland, the European Union and Saudi Arabia itself) that would be activated if it exceeded 10% participation. . This comment immediately plunged the bank’s shares.