After Sparking Collapse In Credit Suisse Shares, Saudi National Bank Says Panic 'Unwarranted:' What Has Changed In 24 Hours

Zinger Key Points
  • The meltdown seen in a handful of regional banking stocks in the U.S. amid bank runs triggered contagion fears.
  • The Credit Suisse crisis may not have come at a worse time and took wind out of the sails of the market rally on Wednesday.

Credit Suisse Group AG’s CS biggest investor, the Saudi National Bank, sent the Swiss investment bank’s shares tumbling on Wednesday. The Middle east bank now seems to be on a damage control exercise.

What Happened: Saudi National Bank’s Chairman Ammar Al Khudairy has chimed in to suggest that the degree of sell-off in Credit Suisse shares was “unwarranted,” CNBC reported.

See Also: Best Financial Services Stocks Right Now

Credit Suisse’s NYSE-listed shares tumbled a little over 30% intraday on Wednesday before recouping some of the losses after reports suggested that the Swiss National Bank would step in to support the troubled bank.

The stock settled the session down 13.94% at $2.16 but off the low of $1.75.

Khudairy reportedly told CNBC that people were just looking for excuses to sell banks. “If you look at how the entire banking sector has dropped, unfortunately, lot of people were just looking for excuses,” he said.

“It’s panic, a little bit of panic. I believe completely unwarranted, whether it be for Credit Suisse or for the entire market.”

He clarified that Credit Suisse hasn’t approached the Saudi bank for any financial assistance since October. The banking executive stuck with his stance that his bank will not take any further stake in Credit Suisse from the 9.9% it held currently.

No Spillover: Khudairy also said the fallout of the collapse of SVB Financial Group SIVB-owned Silicon Valley Bank is different from the 2008 financial crisis.

“This is just one isolated incident, the regulators have cut off any possibilities of a spillover,” he said.

Separately, the Swiss National Bank announced Thursday that it will exercise options to borrow up to 50 billion Swiss francs ($54.06 billion) under a covered loan facility as well as short-term liquidity facility, collateralized by high-quality assets. The company also announced cash tender offer for both U.S. dollar and Euro-denominated debt. This would help optimize interest expense and allow the bank to take advantage of the attractive prices of debt.

Price Action: In premarket trading on Thursday, Credit Suisse shares were rising 8.33% to $2.34, according to Benzinga Pro data.

Read Next: Credit Suisse Seeks Help From Real SNB (Swiss National Bank) After Saudi National Bank Rules Out Additional Assistance

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