The drop in Credit Suisse's stock price, triggered by the collapse of Silicon Valley Bank, has raised concerns among investors regarding the resilience of the global banking system. Today, shares of the Swiss bank fell by about 30% after its largest shareholder stated that it could not provide further support, prompting its CEO to issue new reassurances regarding the bank's financial strength.
The Saudi National Bank, which owns 9.88% of Credit Suisse's shares, announced that it would not purchase additional shares in the Swiss bank for regulatory reasons. Additionally, the five-year credit default swaps for Credit Suisse reached a new high, reigniting fears of a broader threat to the financial system.
Meanwhile, two sources reported to Reuters that the European Central Bank contacted the banks under its supervision to assess their exposure to Credit Suisse. However, one source mentioned that the banks believe the Swiss bank's issues are its own and not related to the banking system as a whole.
Credit Suisse's CEO, Ulrich Körner, moved to calm the situation, stating that the liquidity at the bank remains strong and exceeds all regulatory requirements. Körner had earlier stated that the average liquidity coverage ratio at Credit Suisse was 150% during the first quarter of this year.
Ralph Hamers, CEO of Swiss bank UBS, noted that his bank benefited from the recent market turmoil, experiencing capital inflows. He added, "In the past two days, we have seen inflows as you would expect. Clearly, it's a flight to safety from that perspective, but I believe three days is not enough to make a judgment."
The Swiss National Bank (the central bank) declined to comment on the fall in Credit Suisse's shares. Among the biggest losers in European banks on Wednesday were French lender Société Générale, which dropped 12%, and BNP Paribas, which fell 9%.
## Concerns in Washington
In Washington, a spokesperson for the U.S. Treasury Department stated today that the department is monitoring the situation surrounding Credit Suisse and is in communication with its global counterparts regarding the matter. When asked by Reuters about the impact of Credit Suisse's problems on the U.S. banking system, U.S. Senator Bernie Sanders remarked, "Everyone is concerned."
