The logo of Swiss bank Credit Suisse is seen at a branch office on November 3, 2021 in Zurich, Switzerland.
Arndt Valgemann | reuters
The contagion effect of the recent collapse of the Silicon Valley bank is local and contained, said Credit Suisse Chairman Axel Lehman on Wednesday, who also declined to comment on whether his firm would need any kind of government aid.
On Friday SVB was effectively made a bank run by regulators following massive withdrawals the day before. HSBC on Monday agreed to buy the British arm of the beleaguered US tech startup-focused lender for £1 ($1.21).
European banks posted their worst day in more than a year on Monday due to concerns about contagion and increasing regulation and just some modest profit-taking. Heavy selling continued on Wednesday Credit Suisse itself is falling more than 24%.
According to a Reuters report, the Saudi National Bank, the largest investor in Credit Suisse, said it cannot provide further financial support to the Swiss bank.
“We can’t because we will go above 10%. It’s a regulatory issue,” Saudi National Bank President Ammar Al Khudairi told Reuters on Wednesday. However, he said the SNB is happy with Credit Suisse’s transformation plan and suggested the bank may not need additional funding.
Asked by CNBC’s Hadley Gamble at a panel session in Riyadh on Wednesday whether he would rule out any future government aid, Lehman replied: “That’s not the topic.”
“We’re regulated, we have strong capital ratios, a very strong balance sheet. We’re all hands on deck. So it’s not an issue.”
Lehman also said in the panel session that embroiled lenders Silicon Valley Bank and Silvergate were not subjected to the strict enforcement that regulates large banks in the US and other parts of the world.
“I look at what happened at Silicon Valley Bank, and later other medium-sized banks – they are not really subject to the tight regulation that you have in other parts of the world,” he said. Basel III requirement that underlies the operational structure of most banks.
“So in this regard, I think [the contagion] To some extent local and contained,” he said.
However, the Silicon Valley Bank result still serves as a “warning signal” for the overall market environment, the chairman cautioned.
swiss lender revealed on Tuesday It had identified “certain material weaknesses” in its internal controls over financial reporting for 2021 and 2022.
It has also been confirmed recently Results of 2022 declared on 9th Februarywhich reported a full-year net loss of 7.3 billion Swiss francs ($8 billion).