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There is great uncertainty among investors after the bankruptcy of US bank Silicon Valley Bank. UBS shares fell 12.9 percent in a week. The two largest US banks are Morgan Stanley with 8.4 percent and Goldman Sachs with 8.24 percent. Credit Suisse was hit particularly hard, falling 19.6 percent. Andreas Venditti (50), an analyst at Bank Vontobel, classifies turbulence for Blick.
Is there a fire in the banking industry?
Andreas Venditti: I do not believe in that. The US government has declared a government guarantee for customer deposits of Silicon Valley Bank. However, I would expect the bailout to calm the markets further.
Credit Suisse has been hit particularly hard. The stock temporarily dropped to CHF 2.14 on Monday. How deep can it go?
You can’t say it like that. Credit Suisse is already battered compared to other banks. If one bank runs into trouble, investors look to see which other banks might be affected. Due to the already tense situation, price fluctuations in CS are stronger. However, the determining factor in such declines is how highly customers evaluate the potential risk. How badly could your bank be affected?
And how much might Credit Suisse be affected by bankruptcy in the US and its consequences?
Silicon Valley Bank is a very special case. It specializes in trading with start-ups and venture capitalists. Swiss banks have a much wider base in their business. So I don’t think bankruptcy poses an immediate threat to Credit Suisse. But indirectly, CS will likely notice that investors’ risk appetite continues to decline.
Credit Suisse is in the midst of a major restructuring. Is the struggling banking sector bringing new problems here?
This has no immediate effect. Of course indirectly. Some economists now think the US Federal Reserve may temporarily delay further rate hikes. If interest rates do not continue to rise as expected, earnings prospects for the banking sector will worsen. Credit Suisse would then have to factor in lower income as well.
How long is the turbulence in the stock markets expected to last?
That’s hard to say. European bank stocks, in particular, have risen rapidly since last fall. Many investors should have realized their profits by now. However, the government guarantee in the US will help bank stocks stabilize again in the near future. In general, strong, well-capitalized institutions should emerge as winners.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
