by Brian Shilhavy
Editor, Health Impact News
Switzerland’s second largest bank, Credit Suisse, which has been experiencing bank runs and plummeting stock valuations since the end of 2022, became the first SIFI (systemically important financial institution), or “too big to fail” bank, to crash today forcing regulators to step in and ensure a bailout.
The Saudis almost single-handedly crashed the U.S. Stock Market (and stock markets around the world) this morning when they announced that they were not going to put any more money into the failed Swiss bank.
Problems at Switzerland’s second-biggest lender are causing stocks around the world to falter—and reigniting fears for the banking sector.
On Wednesday, Credit Suisse ‘s top shareholder said in a Bloomberg interview that it wouldn’t invest additional money in the Swiss bank. Saudi National Bank Chairman Ammar Al Khudairy told the media outlet that taking a stake of more than 10% in Credit Suisse would trigger regulatory complications.
That pushed shares of Credit Suisse to a new low on Wednesday. The stock closed down 24% in Zurich and its American depositary receipts (CS) were down 25% in U.S. trading. (Full article.)
While the U.S. Stock Market did end lower today, it most assuredly would have been a blood bath if Swiss Regulators had not stepped in to ensure the world that it was going to bail out their troubled bank. This was after European markets had closed, however, and European banks’ stock values lost 7% at end of trading in Europe today.
Swiss National Bank Issues Statement: “Will Provide Liquidity If Necessary”
Summary:
- Saudis fold – refuse to throw any more money at Credit Suisse
- Credit Suisse stock hits record low
- Credit Suisse 1Y CDS explodes as counterparty risk hedging soars
- Credit Suisse execs urged a “show of confidence” from the Swiss National Bank
- ECB quantifying exposures to Credit Suisse
- US Treasury monitoring situation, talking with other regulators
- Fed working with UST to quantify exposures
- One major govt is pressuring Swiss to intervene
- Systemic risk threat spreads globally
- Swiss authorities seeking to stabilize bank
- Swiss National Bank and Finma issue statement of support
The Swiss National Bank and the country’s regulator said Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks and that the SNB will provide the bank with liquidity if necessary, in a statement. (Full article.)
Since a simple statement made by Saudi National Bank Chairman Ammar Al Khudairy almost crashed the entire world’s financial system today, what does that tell you about the frailty of the current banking system?
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The Most Revolutionary Act 
It will be interesting to see how the Swiss government is going handle this. During the bank crisis in Sweden 1990-1994, the government “borrowed” a bit more than 400 billion SEK from the public retirement funds (private money managed by the state, Wikipedia claim 64 billion from the state treasury, but that’s an embellishment and actually not correct), to save three out of four of the largest banks from going belly up. The three banks was supposed to refund all of it. When the crisis was over, the prime minister told the population that the money was a gift … In the same period, not mentioned by Wikipedia, Soros was gambling with the Swedish and British currencies. UK managed quite ok, but Sweden took a blow …
Still today, the retirement funds has not been compensated, making it the largest heist in Swedish history. The perpetrators are still walking free …
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Interesting, Sasjal. Thanks for the background.
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Big news. Who knows how it will all turn out. Remember when Switzerland was The Place where your money was secure? No more, ever since the US DOJ raided the United Bank of Switzerland looking for hidden assets of US citizens.
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Sounds fishy. As far as I know, [US] DOJ only have jurisdiction within US territory and not in Switzerland or elsewhere. If they were allowed, the Swiss must have made an exemption from the bank customer confidentiality. (The master says …)
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No. There was a big write-up in a New York newspaper about the DOJ raid on the United Bank of Switzerland several years back. I saved the article, because I, too, thought it was fishy. I’ve since learned that the DOJ, under the executive branch of the US, works as an enforcement arm that can chase errant taxpayers all over the globe in search of hidden assets.
I don’t remember specifics, but I found the article in my files a few months ago and need to read it again. It infuriated me then, and the DOJ’s arrogance and behavior in recent years still infuriates me.
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Yes, that was in 2014, but it was mainly an IRS-CI case, even though DOJ took much credit – https://www.justice.gov/opa/pr/credit-suisse-pleads-guilty-conspiracy-aid-and-assist-us-taxpayers-filing-false-returns
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Wow, I was unaware the DOJ had done that, Katherine.
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When I re-locate the article, I will let you know, too.
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