The Fall Of SVB And Signature Bank Is The Trigger For The Drop In Credit Suisse Shares

US Dollar Illustration (Photo: Doc. Antara)

JAKARTA - Banking meeting Credit Suisse lost nearly a quarter of its share value on Wednesday, March 15. This fall was in the midst of the collapse of two regional banks in the United States, namely Silicon Valley Bank and Signature Bank.

Trade Wednesday, March 15 marks the second time it has fallen in three sessions since the collapse of California's Silicon Valley Bank (SVB). As well, the next failure of New York's Signature Bank was that European financial stocks were hit badly.

Citing Antara, however, the dramatic impact on Credit Suisse in trading was largely unexpected, because the institution was huge.

According to 2022 data from Insider Intelligence, Credit Suisse is Switzerland's second-largest and 17th-largest bank in Europe, with assets controlled at around 730 billion euros (772 billion US dollars).

Swiss institutions saw their share price drop by 24 percent in trading Wednesday, March 15, ending the day at 1.7 Swiss francs in heavy trade. At the beginning of the stock session fell more than 30 percent.

The fall Wednesday, March 15 was a tenth straight decline session for the company's shares. They have lost nearly 40 percent of their value since March 3, when stocks were trading at 2.78 Swiss francs.

Recent developments have also increased the volatility of Swiss francs compared to euros, US dollars, and other major currencies.

Stock markets across Europe were also affected by yesterday's losses. The leading DAX 40 stock index on the German Frankfurt Stock Exchange fell 3.3 percent; in Paris, the CAC 40 index fell 3.6 percent; in Milan stocks slipped 4.6 percent; Madrid fell 4.3 percent; and in Amsterdam fell 2.9 percent.

In many cases, the financial sector's shares lead to a decline as investors worry about a further impact on banking institutions.

Credit Suisse's sell-off was reportedly triggered by an annual financial report weaker than expected, followed by announcements that leading shareholders - the Saudi National Bank - will not provide new financial support through the acquisition of more shares.

Swiss central bank said late Wednesday (15/3/2023) that it would give cash to Credit Suisse if needed to defend it, although officials said the bank was not at risk of going bankrupt.

Meanwhile, the European Central Bank notified other major European lenders to monitor their exposure to Suisse's Credit shares and bonds.

European banks have been under pressure over the past 12 months, with inflation rates soaring amid energy supply and trade issues linked to the ongoing conflict between Russia and Ukraine.