Credit Suisse’s difficulties cause European stock markets to panic

Margaux Fodéré, edited by Romain Rouillard
modified to

8:26 p.m., March 15, 2023

After a brief lull on Tuesday, European markets are again in turmoil on Wednesday, five days after the bankruptcy of the American bank SVB. In question, the threat that hovers over Credit Suisse, a bank whose share value has been divided by four in the space of a year.

The respite was short-lived in European financial markets. Five days after the bankruptcy of Silicon Valley Bank and several small American establishments, some French banks experienced a historic loosening on Wednesday. Shares of BNP Paribas and Société Générale lost 11% in value, weighed down in particular by fears surrounding Credit Suisse.

It all started with a statement Tuesday from the Saudi National Bank, the largest shareholder in this Swiss bank, the second in the country. This Saudi establishment has indeed indicated that it would not increase its support for Credit Suisse in the event of difficulties. However, this bank has been in a delicate situation for a long time. In the space of a year, the value of its share has been divided by four. “It’s a bank that has structurally had organizational and risk management problems for five or six years,” confirms Éric Pichet, professor at Kedge Business School.

Little risk of spread

24 hours after the declaration of its main shareholder, Credit Suisse saw its share collapse by 25% on the stock market, dragging in its wake many European banks. But according to Éric Pichet, the risk of spread is quite low. “When we look at the market capitalization of Credit Suisse, I think we are at around 7 billion euros. The market capitalization of UBS (a Swiss wealth management bank Editor’s note) is almost ten times more. We are up to 60 billion euros. I do not think that Credit Suisse, at the current stage, can trigger systemic risk.

Nevertheless, the situation is taken very seriously by the French government. The Minister of the Economy, Bruno Le Maire, is due to meet this Wednesday evening with his Swiss counterpart.