SVB collapse: Swiss National Bank tries to steady markets after Credit Suisse selloff
Zachary Halaschak
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Banking authorities in Switzerland released a statement on Wednesday pledging to provide Credit Suisse with financial support if necessary as doubts rose about its viability.
The statement, put out by the Swiss Financial Market Supervisory Authority and the Swiss National Bank, came after the megabank hemorrhaged value, raising fears that the fallout from Silicon Valley Bank’s collapse is spreading through the global financial system.
“Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks. If necessary, the SNB will provide CS with liquidity,” the agencies said.
Credit Suisse incurred massive losses after the chairman of the bank’s biggest shareholder announced it would not be increasing its stake.
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Credit Suisse is considered a global systemically important bank and reported roughly $570 billion in assets at the end of 2022, though it has seen outflows in recent days as the markets have doubted its strength.
The government also asserted that “the problems of certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets. The strict capital and liquidity requirements applicable to Swiss financial institutions ensure their stability.”
The statement added that Swiss regulation requires strong capital and liquidity buffers and that systematically important firms such as Credit Suisse must meet even higher standards.
“This allows negative effects of major crises and shocks to be absorbed,” the central bank said.
Wednesday was another rough day for the banking sector.
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First Republic Bank led other regional banks in stock market declines, with the San Francisco-based bank closing down more than 21%. The broader market was also largely in the red, with the Dow Jones Industrial Average plunging by as much as 600 points before closing down nearly 300 points.
Generalized anxiety on Wall Street was captured by the Chicago Board Options Exchange Volatility Index, better known as VIX or the “fear index.” The VIX was up nearly 10% around the time that markets closed on Wednesday.