The Swiss National Bank on Wednesday afternoon declared Credit Suisse currently well-capitalized, and it pledged to provide additional liquidity if necessary. The announcement came after Credit Suisse unraveled during U.S. and European market trade on Wednesday. CS stock fell as much as 30% during the day after its largest backer said it would not provide the bank additional financial assistance. European stocks retreated as Credit Suisse stock spun lower. The fresh financial weakness spilled over to U.S. banking stocks.
The chairman of Saudi National Bank, Credit Suisse's top shareholder, ruled out further financial intervention for the Zurich-based bank in an interview with Bloomberg early Wednesday. The news comes after Credit Suisse released its delayed annual report Tuesday, which noted "material weaknesses" to its financial controls and reporting for 2021 and 2022.
Wednesday afternoon, the Swiss National Bank and regulator Swiss Financial Market Supervisor Authority (FINMA) released a joint statement on Credit Suisse and the market uncertainty. The agencies confirmed Credit Suisse "meets the higher capital and liquidity requirements applicable to systemically important banks." The SNB also pledged to provide additional liquidity if necessary.
Credit Suisse appealed to the Swiss National Bank and Swiss regulator FINMA for a public show of support earlier in the day, the Financial Times reported Wednesday.
The bank recorded losses the last five quarters. Revenue declined in four of five recent reporting periods. Credit Suisse, which trades as American depositary receipts, declined 68.6% over the past year. Wednesday's 13.9% drop sent its ADRs to 2.16, after briefly touching a record low of 1.75.
European Bank Declines Spill To U.S.
The Credit Suisse meltdown rippled out across European banks and financials Wednesday. Trading for several was temporarily halted on European exchanges. In U.S. market action, fellow Swiss bank UBS retreated 6.4%. Germany's Deutsche Bank dropped 6.8%.
The weakness rekindled selling among U.S. bank stocks, particularly among larger banks with broad international exposure. U.S. banks and financials had seeen a slight rebound Tuesday as the financial sector digested regulatory efforts to contain the contagion from SVB Financial and Signature Bank.
JPMorgan Chase stock slumped 4.7% Wednesday while Wells Fargo slid 3.2% lower.
Regional bank First Republic retreated 21.4% Wednesday after rebounding Tuesday afternoon. Beverly Hills, Calif.-based Pacific Western Bank, which had rebounded 33% on Tuesday, pared losses to 12.9%.
Western Alliance rallied 8.3% Wednesday after hedge fund Citadel said it had taken a 5.3% stake in the bank. In addition, UBS launched coverage with a buy rating.
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