Investors wary of contagion amid banking crisis fears

Credit Suisse said on Thursday it would borrow up to 50 billion Swiss francs ($53.68 billion) from the Swiss National Bank.

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shares credit suisse It surged on Thursday, bouncing off fresh all-time lows, after the struggling lender announced it would use central bank support to shore up its finances.

second largest bank in switzerland explain It will borrow up to 50 billion Swiss francs ($53.68 billion) from the Swiss National Bank, after the Zurich-based company leads European banks to wild ride low During the last session.

The Swiss-listed stock was up about 24% by 11 a.m. London time (7 a.m. ET) — a sharp move from Wednesday’s share price more than 30% The stock tumbled after its biggest backer said no further aid would be forthcoming due to regulatory restrictions.

Confidence in Credit Suisse suddenly lost amid concerns over health of banking system Spread from America to Europeprompting some to question the “true” value of Credit Suisse’s share price.

“We had to take a step back and of course look at the viability of the business model [and] In the overall regulatory environment,” Beat Wittmann, chairman of Porta Advisors in Switzerland, told CNBC’s “Squawk Box Europe” on Thursday.

“I think the leadership of the banks now has to really use this lifeline to review their plans because it’s clear, as we’ve seen recently from the performance of share prices and credit default swaps, the capital markets are not buying the plan. “

Banks in crisis: Consultancy says weakest link is breaking

Asked for his opinion on Credit Suisse’s sharp drop – which fell below 2 Swiss francs for the first time on Wednesday – Wittmann said the “brutal” monetary tightening cycle led by major central banks in recent months meant the firm was now vulnerable. Started to “really suffer”.

“The weakest link is breaking, it’s happening, it’s completely predictable — it won’t be the last. Now is the time for policymakers to restore confidence and liquidity in the system, both in the U.S. and in the U.S. Switzerland, or somewhere else,” Wittmann said.

Asked about his advice to investors amid the market turmoil, he said: “The upward momentum in inflation and interest rates is clearly fading, so I think there is a very healthy underpinning in the capital markets.”

“But I strongly recommend sticking to high-quality companies — that means strong management, strong balance sheets, strong value proposition. Now you can buy them at much more attractive valuations,” Wittmann added.

“Material Weakness”

even before the shock crashed last week two american banksCredit Suisse has had many problems in recent years, including money laundering charges and espionage allegations.

The bank disclosed earlier this week that “thematerial weakness“Added investor concerns in its report.

However, Credit Suisse management said on Wednesday its latest move to secure a large financing deal showed “decisive action” to strengthen the business. They thank the Swiss National Bank and the Swiss Financial Market Supervisory Authority for their support.

Credit Suisse could see 'big reversal' if situation is handled correctly, asset manager says

Analysts welcomed the move and said fears of a new banking crisis may be overblown.

“The stronger liquidity position and support provided by the Swiss National Bank, backed by Finma, is positive,” RBC Capital Markets analyst Anke Reingen said in a research note on Thursday.

“Regaining trust is key for CS shares. The steps taken should provide comfort as spillovers to the sector can be contained, but the situation remains uncertain,” she added.

Meanwhile, UBS analysts said market participants were “graving with three interrelated but distinct issues: bank solvency, bank liquidity and bank profitability.”

“In short, we believe that concerns about bank solvency are overdone, with most banks maintaining strong liquidity positions,” they added.

“A great turnaround story”?

It wasn’t all bad news for Dan Scott, head of multi-asset management at Swiss asset manager Vontobel, who previously worked at Credit Suisse.

He told CNBC’s “Squawk Box Europe” on Thursday.

Asked by CNBC’s Geoff Cutmore if that meant investors had to be patient despite the market turmoil and the size of bank outflows, Scott replied: “Of course. But again, I think the stress we’re seeing right now should really is predictable”

“When rates are going up so fast, certain business models are going to be challenged, and I don’t think it’s the wealth management business model that’s being challenged. I think it’s more, and why we’re seeing it at Silicon Valley Bank, that the private markets are going to be challenged. challenge,” Scott added.

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