Banking news: Credit Suisse to borrow £44.5bn after SVB collapse amid fears of financial crisis

Gold prices climbed more than 1 percent to their highest level since early February as a fresh banking crisis steered investors away from the seemingly riskier assets.

Spot gold jumped 1.2 percent to $1,924.63 an ounce. U.S. gold futures rose 1.1 percent to $1,931.30.

Sterling gold prices hit a record high, while euro-denominated gold also soared to all-time highs last year.

“People are going to US Treasuries, gold, silver and the dollar. They are moving away from riskier assets such as US stocks and economically sensitive metals such as copper, platinum and palladium,” Phillip Streible, chief market strategist at Blue Line Futures in Chicago, told Reuters.

James Moore wrote this week:

What we needed right now: another banking crisis. But after the bloodbath earlier in the week, a rally quickly began. Regional banks in the United States – which are at risk of experiencing a drop in deposits while larger rivals benefit from inflows – found some support.

Perhaps the Wall Streeters had succeeded in being convicted Silicon Valley Bank (SVB) had a rather unique financial and customer structure. So did New York-based Signature, which closed over the weekend. Interventions by the US Federal Reserve seem to have helped calm nerves.

Credit Suisse plans to borrow up to 44.5 billion pounds from Switzerland’s central bank in a bid to bolster its liquidity and reassure investors.

Credit Suisse sank and dragged down other major European lenders in the wake of US bank failures.

Shares in the lender fell around 30 per cent to around £1.42, before recovering a 24 per cent loss to £1.51 at the close of trading on the SIX exchange.

At its lowest point, the price has fallen more than 85 percent since February 2021. “This additional liquidity will support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank that will be based on customer needs”. the bank said.

Credit Suisse said the borrowing will take place under a secured credit facility and a short-term liquidity facility and will be backed by high-quality assets.

A bank pull conjures up images of It’s a Wonderful Life, with anxious customers huddled shoulder to shoulder, desperately pleading with an outraged George Bailey to hand over their money.

The failure of Silicon Valley Bank last week had panic, but few other similarities, by contrast, took place on Twitter, on message boards, on cell phones and on bank websites.

What made Silicon Valley Bank’s failure unique compared to previous big bank failures was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise new capital. by Friday morning it was insolvent and under government control.

On Monday, the UK government said HSBC would take over the bank’s UK arm.

But what was SVB, why did it collapse and are other banks at risk? We examine these questions here.

Fears that the economy could be on the brink of another “2008-style crisis” sent shares of top European banks plunging and dragged London’s FTSE 100 to its lowest level this year.

Troubled bank Credit Suisse saw its share price fall by as much as a quarter to a new record low, prompting a temporary suspension of its shares on the Swiss market.

Investors were rocked by the collapse of Silicon Valley Bank (SVB) in the US at the weekend, sparking concerns about the viability of “too big to fail” Credit Suisse.

The Dow Jones Industrial Average closed 280 points (0.87%) lower on Wednesday on concerns about the future of Credit Suisse, which has a large US and international presence beyond its headquarters in Switzerland.

The S&P ended the day down 0.7% at 3,891.97 and the Nasdaq Composite managed to gain 0.05% at 11,434 by the close.

At one point the Dow fell 725 points and the S&P briefly saw all of this year’s gains erased.

There was something of a rebound in the afternoon when Swiss regulators announced that the country’s central bank would provide liquidity to Credit Suisse if needed, helping to ease earlier concerns when Reuters reported that Saudi National Bank, the institution’s largest investor, said it could not provide further funding.

Credit Suisse earlier said it had identified “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.

Fears about the bank’s future stem from the crisis that has emerged in regional US banks after the collapse of Silicon Valley Bank and Signature Bank over the weekend.

Credit Suisse’s battered shares lost more than a quarter of their value on Wednesday, hitting a record low, after its biggest shareholder – Saudi Arabia’s National Bank – told traders it would not inject more money into the troubled Swiss bank.

The turmoil in Credit Suisse’s share price triggered an automatic halt in trading of the bank’s shares on the Swiss market and sent shares of other European banks down by double digits. This sparked fresh fears about the health of financial institutions in the wake of the collapse of Silicon Valley Bank in the United States and concerns about mid-sized lenders.

Shares in Credit Suisse fell more than 27 percent to around 1.6 Swiss francs in afternoon trading on the SIX exchange on Wednesday. That’s down from 85% as of February 2021.

A bank pull conjures up images of It’s a Wonderful Life, with anxious customers huddled shoulder to shoulder, desperately pleading with an outraged George Bailey to hand over their money.

The failure of Silicon Valley Bank last week had panic, but few other similarities, by contrast, took place on Twitter, on message boards, on cell phones and on bank websites.

What made Silicon Valley Bank’s failure unique compared to previous big bank failures was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise new capital. by Friday morning it was insolvent and under government control.

At 2 a.m. Monday, he filmed a video for social media explaining how the Silicon Valley Bank crisis began, what was being done about it, and to discourage panic.