Waves of concern continue to ripple across the global banking sector, writes David Buik for LBC.
After the crisis created by SVB Bank, First Republic Bank of California, and Signature Bank and even more worryingly from the demise of Credit Suisse, which caused bondholders to lose circa $17 billion, the quality of these earnings came as a bit of a welcome surprise.
Its shares have fallen 79% in two days, sending ripples of concern through the US banking regulators. A continuing negative factor that could manifest itself from this anomaly, could be that banks may become reluctant to lend money, by tightening their belts. This could stifle growth and lead to a modest recession in the next year.As for the investment banking community, Goldman Sachs did not exactly cover themselves in glory.
There is little point in dwelling on Credit Suisse’s plight. Suffice to say they fell fortunately into the attentive arms of UBS. It is worth recording that in the last quarter of 2022, Credit Suisse lost CHF 110 billion of deposits and CHF 61 billion in the first quarter of 2023! One suspects there will be solid support from the Swiss Central Bank. However, the threat of litigation may play more than a spear-carrying role in their adventure.
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