Stock markets hit again by banking worries

[Social Media]

Shares in troubled Swiss banking giant Credit Suisse have plunged to a record low as investors remain on edge after the collapse of Silicon Valley Bank.

The sell-off sent shares down by more than 20%, extending declines from yesterday, when it disclosed "material weakness" in its accounting controls.

Investors are worried about how the bank, beset by problems, will handle the fallout from a US bank failures.

The worries spread across share markets with all major indexes falling sharply.

"The problems in Credit Suisse once more raise the question whether this is the beginning of a global crisis or just another "idiosyncratic" case," wrote Andrew Kenningham of Capital Economics.

The Bank insisted its financial position was not a concern, with the chief executive saying its cash reserves "still very very strong."

 

The three major share indexes in the US were all lower in opening trade in New York, while major exchanges across Europe - including the FTSE 100 - were down more than 2.5% at mid-afternoon.

[swissie]

It is always possible to "talk a Bank down". Credit-Suisse has problems, but not because of a lack of "liquidity". Besides, the Swiss National Bank has alredy assurd to provide liquidity if necessary (too big to fail). More to worry about smaller US Local Banks, as far as "snowball-effect" is concerned.

Food for thought: Interest rates have gone up, meaning that Bond prices have gone down. Banks have those Bonds at 100% in their books. (Upon repayement). Should someone/something force them to sell their Bonds at current market value, half of the Banks (globally) would have to be declared "insolvent".

[nigelforbes]

6 hours ago, swissie said:

It is always possible to "talk a Bank down". Credit-Suisse has problems, but not because of a lack of "liquidity". Besides, the Swiss National Bank has alredy assurd to provide liquidity if necessary (too big to fail). More to worry about smaller US Local Banks, as far as "snowball-effect" is concerned.

Food for thought: Interest rates have gone up, meaning that Bond prices have gone down. Banks have those Bonds at 100% in their books. (Upon repayement). Should someone/something force them to sell their Bonds at current market value, half of the Banks (globally) would have to be declared "insolvent".

If the banks risk management and Treasury functions are doing their jobs properly, the bonds will be tiered and closely matched to their liabilities so this shouldn't be a big problem for many banks. If the value of the bonds are marked to market rather than classified as hold until maturity, this further eases the potential burden. But it depends which regulatory framework the banks exist within, clearly if it's the US these things aren't always done the way way they should be.

[save the frogs]

just saw an interview with a guy who worked on wall street.

he said a lot of day traders got heart attacks.

 

[nigelforbes]

2 minutes ago, save the frogs said:

just saw an interview with a guy who worked on wall street.

he said a lot of day traders got heart attacks.

 

Day traders always appeared to me to be wave dodgers, dancing at the edge of the water as the incoming tide advances and recedes, trying not to get their feet wet. The game works well until the inevitable happens, sometimes you just can't be quick enough or imagine accurately the power of the wave.