The Credit Suisse crisis: the share price soars after the SNB bailout and Robert Kiyosaki’s tip

Counselor Jeremy Hunt said he welcomed efforts to boost Credit Suisse’s liquidity, as a fall in its share price has raised new concerns about the health of financial institutions.

said the British chancellor Radio Times: “All I will say is of course that I am watching what is going on in the markets, the Governor of the Bank of England is watching carefully what is going on; he is keeping me informed. I think the news we heard from the Swiss authorities overnight is most welcome.”

Earlier, Hunt told Sky News he was watching developments “closely” and said the news from Swiss authorities was “encouraging”.

At 2 a.m. Monday, he posted a video to social media explaining how the Silicon Valley bank crisis began, what was being done about it, and discouraging panic.

Credit Suisse shares jumped more than 30 per cent at the Zurich open on Thursday after it turned to the central bank in a bid to calm concerns about its finances.

It was announced last night that the lender would borrow up to CHF50bn (£44bn) from the Swiss National Bank (SNB) to boost its liquidity.

The ailing banking giant said it was taking decisive action to shore up its finances after its shares plunged 30 percent on Wednesday.

Fears that the global economy could be hit by a new banking crisis wiped billions of pounds off the value of major corporations yesterday amid growing uncertainty about the troubled future of Credit Suisse.

Tensions spread to global markets as shares in the ailing Swiss bank crashed to a record low, sending London’s FTSE 100 index down 3.8 percent.

It closed at 7,344 points, more than erasing the gains the index has made since the beginning of the year. It was a bigger one-day drop than last year’s mini-budget and the day Russia launched a full-scale invasion of Ukraine.

Reporting by Alister Jamison.

There was a frantic weekend of continuous briefings with regulators, lawmakers, administrative officials and President Joe Biden himself on how to handle the demise of the nation’s 16th largest bank and financial institution dedicated to tech entrepreneurs. The crux of the problem was tens of billions of dollars — including comp funds needed to meet the payroll — in Silicon Valley bank accounts that were not protected by federal deposit insurance of just $250,000.

Something had to be done, federal officials agreed, before Asian stock markets opened on Sunday night, and other banks faced the prospect of waves of panicked withdrawals on Monday morning.

Here’s how it unfolded:

Gold prices rose more than 1 percent to their highest levels since early February as a fresh crisis in the banking sector drove investors away from seemingly riskier assets.

The spot gold price jumped 1.2 percent to $1924.63 an ounce. Gold futures rose in the United States by 1.1 percent, to settle at $ 1,931.30.

Gold prices in sterling hit a record high, while euro bullion also jumped towards all-time highs last year.

People go to US Treasuries, gold, silver, and dollars. “They are exiting riskier assets such as US stocks and economically sensitive metals such as copper, platinum and palladium,” Philip Stripel, chief market strategist at Blue Line Futures in Chicago, told Reuters.

James Moore Wrote this week:

Just what we need now: another banking crisis. But after the bloodbath at the start of the week, a rally soon took off. US regional banks – at real risk of experiencing an outflow of their deposits while larger rivals benefit from inflows – found some support.

Wall Street pessimists may have concluded that they were doomed Silicon Valley Bank (SVB) has a somewhat unique financial and client structure. As does the New York-based lender, which is closed for the weekend. Interventions by the US Federal Reserve seem to have helped calm nerves.

Credit Suisse plans to borrow up to 44.5 billion pounds from the Swiss central bank in a bid to boost liquidity and calm investors.

Credit Suisse collapsed and pulled out other major European lenders in the wake of bank failures in the United States.

The lender’s share fell about 30 per cent, to around £1.42, before slumping to a 24 per cent loss at £1.51 at the close of trading on the SIX Exchange.

At its lowest point, the price is down more than 85 percent from February 2021. “This additional liquidity will support the core business of Credit Suisse customers as Credit Suisse takes the necessary steps to create a simpler, more focused bank built around customer needs.” said the bank.

Credit Suisse said that the borrowing will take place within the framework of the covered loan facility and short-term liquidity facility, and will be secured by high-quality assets.

A bank conjures up images of “It’s a Wonderful Life,” with anxious customers huddled shoulder to shoulder, begging a runaway George Bailey to hand over their money.

The Silicon Valley bank failure last week sparked panic but few other similarities have instead occurred on Twitter, message boards, cell phones and bank websites.

What made the Silicon Valley bank failure unique compared to previous failures of big banks was how quickly it collapsed. Last Wednesday afternoon, the $200 billion bank announced a plan to raise new capital; By Friday morning it was insolvent and under government control.

On Monday, the UK government said HSBC would take over the UK wing of the bank.

But what is SVB, why did it collapse, and are other banks at risk? We examine these questions here.