Shares in Credit Suisse lost more than a quarter of their value at one stage yesterday after the Swiss bank said it had identified “material weakness” in its financial reporting. The institution revealed that it would borrow up to 50 billion Swiss francs (£35 billion) from Switzerland’s central bank to fortify its finances.
The lesson from the start of the global financial crisis in 2007 is that governments and central banks must act big and quickly to stop the contagion. This is what happened over the weekend in both the US and UK with regards to Silicon Valley Bank. Now 15 years on from the collapse of Lehman Brothers, Britain’s financial sector is in a markedly different place. Defences have been shored up, liquidity rules tightened and rigorous stress tests put in place to ensure they can withstand similar global forces.
