Published
BanksThe fall in the stock market continues for First Republic and Credit Suisse
During the trading session on Friday, the markets relapsed. And the action of the No2 Swiss banking fell 11% in the middle of the day, following recovering 19.15% the day before.
Credit Suisse shares fell sharply, down 11% on Friday around 1:15 p.m., following recovering 19.15% the day before.
REUTERS
The markets fell back into the red on Friday, mid-session, following a short-lived respite from the stock market relapse of weak banking links First Republic and Credit Suisse, despite firewalls to prevent the situation from getting out of hand .
Relieved, in the morning, by the financial aid provided to these two banks and reinforced by the assurances of the European Central Bank (ECB) for the euro zone, the indices finally registered a decline, from Paris (-0.59% ) in Milan (-0.27%), via Frankfurt (-0.39%) and London (-0.29%), shortly following 1:15 p.m.
Eleven major American banks pledged on Thursday to come to the rescue of First Republic, by depositing 30 billion dollars in this establishment to strengthen its liquidity and prevent the situation from escalating, following the bankruptcies of Silicon Valley Bank, Signature Bank and Silvergate, last week.
Investors terrified of contagion risk
An effort hailed by the US Federal Reserve (Fed), the Treasury and two financial regulators, while investors are terrified of a possible risk of contagion to other banking establishments. Since March 10, these bank failures across the Atlantic have revived the specter of the 2008 financial crisis, which had destabilized the global economy.
In a sign of financial strain, US banks have since borrowed a total of $164.8 billion from two US Federal Reserve guarantee facilities in recent days, according to financial news agency Bloomberg.
Opening at 17% for First Republic, mid-session at -11% for Credit Suisse
But the stock of First Republic, the 14th largest U.S. bank by asset size, was down more than 13% in electronic trading before the opening on Wall Street, before opening down more than 17 percent. And that of Credit Suisse relapsed sharply on Friday (by 11% around 1:15 p.m.), following having recovered 19.15% the day before, without managing to compensate for the worst fall in its history on Wednesday (by almost 25%).
The struggling banking giant has received support from the Swiss National Bank to bolster its liquidity, while speculation of a takeover of the banking giant has resurfaced, analysts said. The Governor of the Banque de France François Villeroy de Galhau wanted to be reassuring. “French and European banks are extremely solid”, he declared on Friday on BFM Business, and “are not in the situation of certain American banks”.
However, the European Central Bank (ECB) is meeting on its side, on Friday, its supervisory body for banks in the euro zone, for an “exchange of views” on the banking sector following the turbulence of the last few days. It is the second time that this body has been convened this week for a meeting outside the usual schedule, given the rapid developments affecting the sector.
Softer stance on inflation?
All of this banking turmoil has fueled speculation that central banks might ease their stance on inflation, in order to avoid a severe recession. On Thursday, however, the ECB reaffirmed its determination to fight persistently high inflation by raising its key interest rates by an additional 0.5 percentage point, but refrained from deciding on further monetary tightening.
(AFP)
