February 28, 2024

Credit Suisse raises concerns about the health of banks

Wednesday started crowded with the financial market and the banking sector returned to investors’ radar, after declining pressure yesterday. The speech of Ammar Al-Khudairi, President of the National Bank of Saudi Arabia, indicated that there will be no new contributions to cover a possible need for liquidity by Credit Suisse, which led to a decrease in the sector’s shares and the shares of the Swiss bank sank by more than 20%.

Khudairi was firm in his response in an interview with Bloomberg earlier Wednesday. “The answer is absolutely not, for many reasons that go beyond regulatory and legal issues,” said the head of the financial institution that is Credit Suisse’s largest shareholder.

Investors reacted anxiously, and bank shares in the EuroStoxx 600 fell more than 6%, with banks BNP Paribas (-10.28%) and Société Générale (-10.09%) leading the way. Risk aversion is also driving interest rate cuts in the Eurozone, and the market, which has been pricing in increases in the cost of money at upcoming ECB meetings, believes there should be rate cuts soon.

Here, investors are still waiting for details of the new financial framework, which is due to be presented in the coming days. According to the Minister of Finance, Fernando Haddad, President Lula should evaluate the proposal soon and, once approved, the text will be submitted to the National Congress.