Economist Nouriel Roubini compared Credit Suisse’s problems that escalated on Wednesday to Lehman Brothers, which collapsed in connection with the financial crisis.
Swiss bank Shares of Credit Suisse and other European banks fell sharply on Wednesday.
The turmoil began after Credit Suisse’s major owner Saudi National Bank, which has struggled with its profitability for a long time, said it could no longer offer the bank more financial support. It also caused uncertainty in banking stocks more broadly.
Credit Suisse shares fell 24.2 percent to the lowest price in the history of the stock. Earlier in the day, the stock plunged 31 percent at its worst.
Among other large European banks, for example, the German Deutsche Bank’s share fell by 9.3 percent and the French Société Générale’s by 12.2 percent.
On the Helsinki stock exchange, Nordea sank 7.5 percent to 10.26 euros.
The Euro Stoxx 600 index, which broadly describes European shares, weakened by 2.9 percent and the general index of the Helsinki Stock Exchange by 3.5 percent. Wednesday was the worst stock market day in Helsinki this year.
Wall Street also opened clearly to the downside due to Credit Suisse concerns. The selling wave caused by Credit Suisse is a continuation of the banking turmoil caused by the collapse of the US Silicon Valley Bank.
Credit Suisse’s share plunge eased in the evening when, according to media reports, it asked for help from the Swiss National Bank. Talouslehti Financial Times (FT) sources by the bank asked the central bank for public support after Credit Suisse’s stock plunged by around 30 percent.
According to FT’s sources, Credit Suisse also requested a similar indication of support from the Swiss financial regulator Finma.
Neither of the institutions announced their possible support by Wednesday.
Reuters news agency reported that the finance ministers of France and Switzerland planned to discuss Credit Suisse on Wednesday. Prime Minister of France Elisabeth Borne however, said in the French parliament that the Swiss authorities must solve the bank’s problems.
The American newspaper The Wall Street Journal, on the other hand toldthat the European Central Bank was in contact with the banks it supervises on Wednesday about their exposure to Credit Suisse’s problems.
Swiss the authorities are under heavy pressure to react somehow to Credit Suisse’s problems.
Credit Suisse is the country’s second internationally systemically significant bank, along with UBS. Nordea was also once on this list.
The banks on the list are essentially banks that are too big to fail. Their collapse would have far-reaching effects on the financial system worldwide, as they are interconnected through financial markets.
Switzerland has a long tradition and is known for its banks. It would be difficult for the country’s authorities to let Credit Suisse fail, because it would be a hard blow to the country’s reputation as a banking country.
Economist Nouriel Roubini compared Credit Suisse’s problems on Twitter to the American Lehman Brothers, which fell in connection with the financial crisis.
“The Credit Suisse crisis is a ‘Lehman moment’ for European and global markets. The bank is too big to fail and too big to save. It is not even clear what the bank’s numerous unrealized losses are,” Roubini wrote.
Roubini is known as a pessimistic market commentator. He earned the nickname “Doctor of Doom” after correctly predicting the 2008 financial crisis.
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