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Relaxation at Credit Suisse: share price rose 33 percent when the stock market opened. The stock now costs 2.25 francs again and is recovering somewhat after yesterday’s drop. The leading Swiss index SMI is currently up 1.2 percent. UBS is also recovering: shares are up about 6 percent.
On Wednesday morning, CS President Axel Lehmann (64) wanted to know nothing about state aid, but hours later there he was: Swiss National Bank (SNB) backing sick Credit Suisse, stretching a thick safety net and making capital available.
The bank is happy to use it and said it wants to borrow up to CHF 50 billion from the SNB to “strengthen” the entire group. Message to customers: Even if you don’t completely trust our capital base, your money is safe thanks to the cash injection from the SNB.
looking for trust
Message to markets and bank lenders: give us confidence again, the government will help us if needed. This message is especially important globally. Credit Suisse is one of 30 banks worldwide called “too big to fail”. On Wednesday, supervisory authorities in Europe and the US asked their banks to find out exactly how they are linked to CS: Could other financial institutions be affected by the Swiss bank’s difficulties?
Because that was the problem with the 2008 financial crisis: the banks no longer trusted each other, the interbank business collapsed. This should now be avoided, so the CS probably had no choice but to seize the state’s security line.
Pre-market indicators are good
The banking quake shifted to Europe, the epicenter: Credit Suisse. It is worth only 6.7 billion francs on the stock market. Do investors believe the safety net is strong enough if the CS share price rises when the stock market opens at 9 a.m. and credit default insurance (CDS) premiums fall again?
Early signs point to this: Premarket indicators show a price increase of over 30 percent. The price had dropped 24 percent the previous day.
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.
