Swiss Bank Shares Plunged and has sent shockwaves through the global banking sector, following the collapse of California’s Silicon Valley Bank. Credit Suisse, one of the largest European banks, has seen its shares hit an all-time low, triggering fears over the stability of the banking sector. Let’s take a look in detail what are the causes of the plunge in Credit Suisse’s shares and what it means for the banking industry as a whole.
Why did the Swiss Bank Shares Plunge?
Credit Suisse’s stock dropped more than 30% after its main backer, Saudi National Bank, ruled out new funding due to regulations that limit its stake to 9.9%. This raised concerns about potential flaws in the banking sector, which is still reeling from Silicon Valley Bank’s failure. Concerns about Credit Suisse, which is regarded as systemically important to the global financial system, aggravated the situation.
Should We Be Worried?
In the worst-case scenario, systemically important banks are supposed to have enough capital and “living wills” in place to fail in a relatively orderly manner. These living wills, however, have yet to be put to the test by a real-life banking failure. It is important to remember that share prices reflect investor sentiment rather than actual balance-sheet strength.
What Does This Mean for the Banking Industry?
We are likely to see more distress in bank stocks since we have had three major events with Signature and Silicon Valley Collapse last week, that have shaken investor trust in bank stocks in the short term, and another similar event could be catastrophic for bank stock confidence. All bank stocks in Australia has been down at least 15% in the last 30 days.
Do You Want To Know What Are The Stocks We Are Going To Be Buying And When We Are Going To Buying Them?
Firstly, we would like to invite you, to join our Facebook Community: Buy, Growth and Sell Strategy for Share Traders it is free of charge and we share great quality content including articles and considerations like this one.
In our community you can chat with the team about are Online Trading Course and our VIP Membership program and understand in details how these two services could help you in your trading and investment journey.
The information provided by BG Trading to you does not constitute personal financial product advice. The information provided is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. BG trading recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances. Past performance of any product discussed is not indicative of future performance. (We urge that caution should be exercised in assessing past performance. All financial products are subject to market forces and unpredictable events that may adversely affect their future performance)