“A bank lends you an umbrella when the weather is nice and takes it back when it rains. Only a few weeks ago, European banks published weather reports that were less degraded than feared last fall, and with sufficient safety cushions to reassure their financial investors. But once again, a financial wind blowing from the United States ends up sweeping the Old Continent.
The fall of Silicon Valley Bank has forced asset managers to examine the weak links in the banking system. And it risks being the signal of a “repricing” of risk on the credit market, which looks towards the central banks.
Oil on the fire
A statement to double-edged of its shareholder Saudi National Bank was therefore enough to put a little more oil on the fire of Credit Suisse. The new fall in its action (-23%) was accompanied by a surge in the credit derivative contract – the CDS protecting against default – never seen during the last financial crises.
This is not the case for the other major European banks. But their actions have come under far more attack than those of the American giants. The least fit of the thirty major global systemic banks is however largely American, with First Boston. Given the lack of equity investors on the Old Continent, and the absence of a large unified capital market, this should not come as a surprise.
To note
The fall in Credit Suisse shares has brought market capitalization below 7 billion Swiss francs, for tangible equity close to 42 billion at the end of 2022 and a balance sheet total of 531 billion.
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