The Swiss National Bank Will “Bail Out” Credit Suisse “If Necessary”

Mar 15, 2023

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The country’s financial authorities will help Credit Suisse, but they claim that there is no risk of contagion.

Contagion

The Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank (SNB) have issued a joint in answer to Credit Suisse’s previous request for help. The Swiss financial authorities claim that the current problems of certain US banks do not pose a direct risk of contagion for the Swiss financial markets. They argue that all Swiss financial institutions must meet strict capital and liquidity requirements. Credit Suisse, a systemically important bank, meets these requirements, thus, it is protected from any harm caused by the ripple effects caused by the failure of the US bank.

Giving Away Money

Even though the FINMA and the SNB are adamant on the matter, they agreed to provide help “if necessary”. In case Credit Suisse needs financial aid, the SNB will provide it with liquidity. This basically means that the SNB will be giving away money in case Credit Suisse asks for it.

The statement goes on saying that there are no indications of a direct risk of contagion for Swiss institutions. However, due to the current turmoil in the US banking market, FINMA and the SNB are closely monitoring developments to ensure financial stability.

Sceptical Partners

The Saudi National Bank, which owns more than 10 percent of Credit Suisse, is not so eager to provide help for the bank. When asked about possible financial aid, SNB chair Ammar Alkhudairy flat out said that it is out of the question.

The answer is absolutely not, for many reasons outside the simplest reason which is regulatory and statutory.

He also added that he was content with the steps the bank took to restructure and is confident that there would be no need for additional funding.

Public View

The announcement was received with varying reactions from both the financial industry and the public.

SNB and FINMA issue statement on market uncertainty

— Swiss National Bank (@SNB_BNS)

Many argued that with Credit Suisse being one of the systemically important banks, the SNB has no other voice but to help out the bank. The possible collapse of the bank would tore a huge hole not only in the European, but also in the global economy. This is why it was never a question whether FINMA and the SNB would help Credit Suisse or not.

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