Credit Suisse shares feel the pinch of the collapse of SVB and Signature banks
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The shares of Credit Suisse dropped to a new record low during the Monday morning trading hours at the Switzerland stock exchange. The plunge comes amid a poor performance of bank stocks across Asia and Europe.
Credit Suisse shares drop to a new low
On Monday, there was a notable drop in bank shares across Asia and Europe. The drop came amid the collapse of two leading banks in the United States: Silicon Valley Bank and Signature Bank.
US bank stocks witnessed a notable drop on Monday premarket, with investors failing to be reassured about the strength of the country’s banking sector. On Sunday, US regulators tried to shore up confidence in the country’s banking sector, including confirming that Silicon Valley Bank and Signature Bank depositors would be made whole.
However, the assurances given by US banks have done very little to restore confidence, as most bank stocks tanked on Monday. Credit Suisse shares plunged by more than 12% on Monday. At the time of writing, the shares were still down by 1.86%, trading at 2.22 CHF. The shares are down by nearly 20% year-to-date.
On Monday, Credit Suisse also recorded a drop in debt as the company’s USD perpetual bonds suffered the most damage. These bonds recorded a drop of between five and ten cents on the dollar.
Credit Suisse is struggling to recover from the multiple scandals that have affected the bank’s operations. Credit Suisse is the second-largest bank in Singapore, and it is currently restructuring and reducing costs.
European Banks affected by US banks’ failure
However, Credit Suisse is not the only European bank that witnessed a drop on Monday as markets opened on the news of SVB and Signature bank’s collapse. Europe’s STOXX bank index was down by 5.7% on Monday. The index had also plunged by 3.78% on Friday, leaving it probe to recording the largest two-day consecutive decline since February last year.
In Germany, the financial markets regulator, BaFin, announced the temporary closure of the German division of SVB. The regulatory body said that the closure of the bank was attributed to concerns over whether it would meet its debt obligations in the near future. The regulator said that despite this decision, SVB’s German branch did not pose a systemic risk to the stability of the country’s financial sector.
On the other hand, the UK division of SVB was acquitted by HSBC for a historic £1. On Monday, the Financial Conduct Authority announced that it was working with other regulators to guarantee the financial sector’s stability after the collapse of SVB.
SVB’s failure also created panic in the startup sector because the bank was more tech-focused. The fallout of this bank could have significant effects on the technology industry. For instance, Circle, the issuer of the USDC stablecoin, revealed having $3.3 billion in the collapsed bank, causing USDC to lose its peg briefly before recovering.
