Credit Suisse’s shares soared 30% on Thursday after it announced it will move to shore up its finances by borrowing up to nearly $54 billion from the Swiss central bank.
People walk past the entrance of Swiss bank Credit Suisse in Zurich, Switzerland, March 16, 2023.
The banking turmoil has cast a shadow over Thursday’s meeting of the European Central Bank. Before the chaos erupted, ECB head Christine Lagarde had said it was “very likely” that the bank would make a large, half-percentage point rate increase to tackle stubbornly high inflation. Fanning new fears about the health of financial institutions following the recent collapse of Silicon Valley Bank and Signature Bank in the U.S., Credit Suisse’s share price hit a record low Wednesday.
Credit Suisse is “a much bigger concern for the global economy” than the midsize U.S. banks that collapsed, said Andrew Kenningham, chief Europe economist for Capital Economics.“Credit Suisse is not just a Swiss problem but a global one,” he said. Investors responded to “a broader structural problem” in banking following a long period of low interest rates and “very, very loose monetary policy,” said Sascha Steffen, professor of finance at the Frankfurt School of Finance & Management.
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