4.9 C
London
Monday, February 26, 2024
HomeBusinessAs shares rise, Chancellor "welcomes" Credit Suisse's £44.5bn rescue.

As shares rise, Chancellor “welcomes” Credit Suisse’s £44.5bn rescue.

The second-largest bank in Switzerland is the first significant global bank to receive such a bailout since the 2008 financial crisis. The bank stated that it was “taking decisive action to strengthen its liquidity in advance.”

Chancellor Jeremy Hunt “welcomed” the Swiss central bank’s decision to provide Credit Suisse with a £44.5 billion lifeline.

The bank stated that it was “taking decisive action to proactively strengthen its liquidity” with the central bank loan after its stock price dropped by about 30 percent to approximately 1,6 Swiss francs (£1.42), heightening concerns of a global financial crisis.

The SIX stock exchange value of the shares rose to 1,7 Swiss francs (£1.51), a 24% loss.

As shares rise, Chancellor "welcomes" Credit Suisse's £44.5bn rescue.

Mr. Hunt told, the day after delivering his spring budget, that developments in Switzerland were “encouraging.”

During a separate radio interview, he stated that chancellors “never comment on market movements for very obvious reasons,” but added, “All I will say is that of course I monitor what is happening on the markets, and the Bank of England governor monitors carefully what is happening; he keeps me informed.”

I believe the news we received overnight from Swiss authorities is welcome.

Credit Suisse stated in a press release that the additional funding would be used to support its core business and clients as it “takes the necessary steps to create a simpler and more client-centric bank”

It occurred after the Swiss National Bank and the Swiss financial markets regulator pledged to provide emergency funding if necessary.

The central bank affirmed that Credit Suisse met “the capital and liquidity requirements imposed on systemically significant banks.”

Up to 30% of the stock market declines.

Wednesday, Credit Suisse shook the markets by announcing “material weaknesses” in its financial reporting processes for 2021 and 2022.

Its market value decreased by as much as 30% after its largest shareholder, Saudi National Bank, announced that it would not provide any additional financial assistance because regulations prohibit it from increasing its equity stake above 10%, which is near to where it currently stands.

It prompted an automatic halt in the trading of Credit Suisse shares on the Swiss stock exchange and sent the shares of other European banks plummeting, in some cases by double digits.

Worries about the finance sector

The combined market value of the FTSE fell by £75bn by Wednesday’s close after the index experienced its largest point-based decline since the early days of the COVID crisis.

Axel Lehmann, chairman of Credit Suisse, defended the bank on Wednesday at a financial conference in Riyadh, Saudi Arabia, by stating, “we’ve already taken the medicine” to reduce risks.

When questioned whether he would rule out future government assistance, he responded, “That’s not a topic… We are governed. Our capital ratios and bank sheet are strong. We work together, so no problem.”

In recent years, Credit Suisse has faced multiple crises, also including a corporate espionage scandal, losses related to the bankruptcy of supply chain finance group Greensill Capital, and the collapse of hedge fund management firm Archegos Capital.

In a report released on Tuesday, the bank stated that consumer deposits decreased by 41% (159.6 billion Swiss francs or £142 billion) compared to the previous year.

Last week, Silicon Valley Bank and Signature Bank, two mid-sized US banks, went bankrupt, raising banking industry worries.

Read More

RELATED ARTICLES

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Most Popular

Urgent regulations needed to prevent space race war

To avert a nuclear war triggered by the 'Wild West' competition for space resources, the international community needs immediate regulations, warned a British expert who contributed to NASA's Mars mission.

Meta forms team against EU election disinformation

Marco Pancini, Head of EU affairs at Meta, stated that the "EU-specific Elections Operations Centre" would bring together experts from across the company to tackle misinformation, influence operations, and threats stemming from the misuse of artificial intelligence.

Arsenal player David Raya trains XL bullies to protect his property

In England and Wales, it became illegal to own an XL bully dog without an exemption certificate at the beginning of this month. Reports indicate that Arsenal goalkeeper David Raya has been protected by an XL Rottweiler dog after several footballers' homes were reportedly targeted by criminals.

At least 15 slain in Burkina Faso Catholic church attack

The violence on Sunday in the village of Essakane was described as a "terrorist attack" by the vicar-general of the Catholic Diocese of Dori, Essakane, Abbot Jean-Pierre Sawadogo. He stated that twelve attendees were killed at the scene, and three more succumbed to their wounds while being treated.

Recent Comments