(News Bulletin 247) – Credit Suisse is experiencing one of the most turbulent sessions in its history this Wednesday after statements deemed disturbing by the president of Saudi National Bank, its main shareholder.

In an interview with Bloomberg TV, Ammar Al Khudairy, the head of the Saudi establishment, said that his group ruled out increasing its capital in Credit Suisse, citing regulatory obstacles.

As of December 10, the Saudi National Bank held 395.5 million shares, representing 9.88% of Credit Suisse’s voting rights, which puts it ahead of the stakes of Qatar Holding (5%) and Olayan Group (4 .9%).

While fears surrounding the bankruptcy of SVB had tended to ease since the beginning of the week, these remarks have revived investors’ fears about the health of the global financial system.

Listed on the Zurich Stock Exchange, the Credit Suisse share limited its fall to around 16% after having lost up to 30% at the lowest of the day.

“Credit Suisse was already widely seen as the weakest link among major European banks,” said Andrew Kenningham, analyst at Capital Economics.

In a press release released yesterday, the Swiss private bank had itself acknowledged having identified certain “weak points” in its accounts for the 2021 and 2022 financial years.

“The biggest concern is that Credit Suisse is inherently a much bigger problem for the global economy than the regional US banks that were in the line of fire last week,” said Andrew Kenningham.

According to calculations made by the professional, the size of its balance sheet is much larger than that of SVB, with some 530 billion Swiss francs in assets at the end of 2022, and an international footprint that extends to many subsidiaries. abroad, including in the United States.

But the Capital Economics analyst also points out that Credit Suisse is a bank qualified as a systemically important financial institution (Global Systemically Important Bank – GSIB), which means that its survival must be ensured at all costs.

‘Experience suggests that a resolution can be quickly found without too much contagion effect provided that the authorities take strong decisions and that long-term creditors are protected’, he continues.

Frightened by the fall of Credit Suisse, the European stock markets all tumbled this Wednesday afternoon.

In Zurich, the SMI index drops 1.5% while in Frankfurt, the DAX drops by 2.6%. In London, the FTSE drops 2.8% and the pan-European Euro STOXX 50 index drops 2.8%

This stampede extended to the American markets, causing the Dow Jones to lose almost 1.8% on Wednesday morning.

‘In the end, and this is perhaps the most important issue, the problems encountered by Credit Suisse still raise the question of whether this is the beginning of a global financial crisis or if it is simply a ‘idiosyncratic’ file, wonders Andrew Kenningham, at Capital Economics.

‘After the British Gilts crisis last September and the bankruptcies of American regional banks last week, this is the third ‘isolated’ problem identified in recent months, ‘he recalls.

‘It would therefore be ridiculous to believe that other problems will not emerge later,’ he concludes.

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