Strong areas of turbulence for the banking sector after the bank failure of the American bank Silicon Valley Bank (SVB). Worried eyes are now on Credit Suisse in the wake of a nightmare day for the country's second-largest bank that collapsed on the stock market. The Swiss banking giant announced on Thursday a short-term loan of up to 50 billion Swiss francs from the country's central bank, .

"These measures are a decisive step to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders," the bank's Chief Executive Officer, Ulrich Körner, said in a statement. At the same time, the bank announced a series of debt buyback operations worth approximately 3 billion Swiss francs.

A bank too big to fail

On Wednesday, Credit Suisse shares fell 24.24% at the close. The group, one of 30 banks in the world considered too big to fail, was now worth just under 6.7 billion Swiss francs.

After a surprising silence, the central bank (SNB) and the Swiss financial market watchdog had assured the group of their support on Wednesday evening. "Credit Suisse meets the capital and liquidity requirements for systemically important banks. If necessary, the SNB will make liquidity available to Credit Suisse," the SNB and FINMA said in a joint statement issued earlier this evening.

Earlier in the day, the two most senior executives of Credit Suisse had already tried to reassure on the financial strength of the banking giant but without succeeding in convincing investors who inflicted on the bank's stock the worst fall in its history.

"Our liquidity base is very, very strong"

Perceived as the weak link in Switzerland, the institution saw its share price fall by up to 30% to reach a new historic low of 1.55 Swiss francs despite the intervention of its president, Axel Lehmann and its managing director Ulrich Körner to try to straighten the bar.

For the SNB and Finma, "the current turbulence in the US banking market does not suggest that there is a risk of direct contagion for Swiss institutions".

In an interview with the television channel Channel News Asia, retweeted by the bank, Ulrich Körner multiplied the reassuring words: "We are a solid bank, we are a global bank under Swiss regulation". "We meet and exceed virtually all regulatory requirements," he added, adding: "Our capital, our liquidity base is very, very strong."

Tidy markets

The concern goes beyond the borders of the Alpine country and the US Treasury said it was "monitoring the situation and being in contact with its international counterparts". Investors remained worried on Thursday morning, the Asian stock markets opening sharply lower in the wake of the unscrewing the day before the European markets - Paris losing Wednesday evening 3.58% and London 3.83%, signing their worst session since March 2022.

The precipitous fall in the stock began after statements by the chairman of the Saudi National Bank, Credit Suisse's largest shareholder. The Saudis came to the bank's rescue by taking a stake in its capital in November. But Saudi National Bank has "absolutely no plans" to inject more money, mainly for regulatory reasons, said Ammar al-Khudairy, its chairman.

The Saudi National Bank holds a 9.8% stake. But under Swiss law, the market watchdog, Finma, would have to decide if it crossed the 10% threshold.

Credit Suisse has been in turmoil since the collapse of the British financial company Greensill, which marked the beginning of a series of scandals. Since March 2021, the stock has lost more than 83% of its value.

The SVB case

"The pressure on Credit Suisse has hit an already nervous market," Rabobank analyst Jane Foley told AFP. Investors are worried about the risk of contagion after the collapse of the US bank SVB.

But if Credit Suisse were to face "existential problems," then "we would be facing something of a whole new dimension," Neil Wilson, an analyst at Finalto, said in a market commentary.

Unlike SVB, Credit Suisse is one of 30 global banks considered too big to fail, which imposes stricter regulations on it to withstand the shock in the event of a difficulty. Credit Suisse launched a restructuring program in October to try to recover. But some shareholders ended up throwing in the towel.

In early February, Credit Suisse reported a net loss of 7.3 billion Swiss francs (nearly 7.4 billion euros) for the 2022 financial year and warned that it still expects a "substantial" pre-tax loss in 2023.

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