Following a request by Credit Suisse on Wednesday for a statement of support from the Swiss National Bank and the Swiss Financial Market Supervisory Authority, they did just that.
Following a 24 percent drop in the price of Credit Suisse stock on Wednesday on comments from a major shareholder that it would not provide additional funds to the beleaguered lender, the Swiss National Bank (SNB) and Swiss Financial Market Supervisory Authority (Finma), issued a joint statement of support for Credit Suisse.
In perhaps the financial understatement of the year, the institutions said «Credit Suisse’s stock exchange value and the value of its debt securities have been particularly affected by market reactions in recent days.»
Following Developments Very Closely
For its part, Finma confirmed Credit Suisse meets the higher capital and liquidity requirements applicable to systemically important banks. Perhaps more importantly, the SNB said it will provide liquidity to the globally active bank if necessary.
Both institutions said they are following developments very closely and are in close contact with the Federal Department of Finance to ensure financial stability.
Catalyst For Decline
Presumably, in response to the financial market turmoil unleashed by the closure of SVB, the institutions pointed out that «there are no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the US banking market.»
The problems of SVB were seen by many observers as the catalyst for the decline in the prices of banking stocks.
Higher Capital and Liquidity Requirements
The statement went on to say that Swiss regulations require all banks to maintain capital and liquidity buffers meeting or exceeding the minimum requirements of the Basel standards.
Furthermore, systemically important banks have to meet higher capital and liquidity requirements. This allows the negative effects of major crises and shocks to be absorbed.
