What has happened at Credit Suisse?

The 167-year-old Credit Suisse, with its origins as a bank for the ultrawealthy elite, announced Tuesday in its annual report that it had uncovered “material weaknesses” relating to its financial reporting. This sent shares plummeting and sparked jitters across global financial markets as nervous investors rushed to limit their exposure. Credit Suisse said it was working to address its problems, which could require it to “expend significant resources.” To calm investors, the Swiss National Bank issued a statement alongside the country’s main financial regulator, known as FINMA, stating that “if necessary,” it would provide Credit Suisse with liquidity, which it subsequently did to the tune of $53.7 billion. Credit Suisse also said it would buy back up to $3 billion worth of debt. Rather than one issue, the bank has had a slow burn buildup of problems in recent months. It is struggling with financial losses, risk and compliance issues, as well as a high-profile data breach. In October, it disclosed that it had suffered significant customer withdrawals. In recent years it was also impacted from its relationships with the collapsed hedge fund Archegos and a failed financial firm , Greensill Capital.

How is Saudi Arabia involved?

The Saudi National Bank is Credit Suisse’s largest investor, after acquiring an almost 10 percent stake in the bank last year. Asked if the Saudis would be willing to buttress the bank with more funds, Saudi National Bank Chairman Ammar Al Khudairy told Bloomberg TV on Wednesday: “The answer is absolutely not — for many reasons,” compounding Credit Suisse’s problems. He said the Saudi stake was currently 9.8 percent and ownership over 10 percent would activate a host of higher regulatory and statutory rules. “We’re not inclined to get into a new regulatory regime,” he added. Neighboring Qatar’s sovereign wealth fund is another large investor in Credit Suisse, with a 6.8 percent stake. It has yet to publicly comment on the matter.

Is this connected to the Silicon Valley Bank collapse?

Credit Suisse’s latest troubles are unconnected to those that brought down Silicon Valley Bank and Signature Bank of New York, less than a week ago. However, the failure of SVB — marking the second-biggest bank failure in U.S. history — rattled markets and created a bleak financial outlook as investors remain fearful of a contagion after learning of Credit Suisse’s announcement this week. Credit Suisse is also much larger and more integrated with the global financial system than SVB, making any meltdown more far reaching and signaling that the banking-sector issues are not confined to U.S. banks. But Credit Suisse has substantially more liquid assets than SVB and is labeled a “Global Systemically Important Bank (G-SIB)” — meaning it is subject to significantly higher standards for capital, funding, liquidity and leverage requirements. SVB, which works with tech clients, among others, got into trouble when its large holdings in U.S. government bonds fell in value as the Federal Reserve raised interest rates. Concerns about SVB’s health then sparked a run on deposits. The White House scrambled over the weekend to calm customers and the banking industry, in an effort to avert a sense of crisis. To stave off a broader panic, U.S. authorities stepped in to assure depositors at the failed banks that they would not lose their money, calming matters somewhat, but markets remain on edge.

Is this as bad as the 2008 financial crisis?

No. Unlike Lehman Brothers, which collapsed suddenly in 2008 as people recognized the size of its off-book liabilities and businesses, Credit Suisse’s troubles do not yet appear as critical, although it has struggled to restructure. The liquidity lifeline from the national bank on Thursday boosted shares more than 30 percent, signaling the crisis may be contained as investors feel reassured. However, markets can change quickly, and Credit Suisse is the first major global bank to be thrown an emergency lifeline since the 2008 financial crisis, Reuters reported . In a bid to restore confidence, the bank’s chief executive, Ulrich Koerner, told staff in a memo Thursday that they should “focus on facts” as he acknowledged it had been a difficult week for the banking sector and pledged to move forward by improving business operations. Jeanne Whalen, Rachel Lerman, Steven Mufson, Ellen Francis and Annabelle Timsit contributed to this report.

Business

What to know about the Credit Suisse crisis and its global impact

By Adela Suliman

March 16, 2023 at 9:07 a.m. EDT

Switzerland’s national flag flies in front of the headquarters of Swiss bank Credit Suisse in Zurich in July. (Arnd Wiegmann/Reuters)

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5 min

LONDON — Credit Suisse, a behemoth of European banking with assets stretching across the globe, is experiencing turbulence.

Earlier this week, Credit Suisse disclosed “material weaknesses” in its financial reporting, and it was unclear whether the major bank would be able to get a financial rescue. That sent markets into panic. But a $53.7 billion liquidity lifeline from Switzerland’s central bank appeared to be calming European investors as markets rallied Thursday.

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Credit Suisse’s troubles come in the wake of Silicon Valley Bank’s collapse less than a week ago. SVB’s failure, for many people, appeared to come out of nowhere. Two banking crises, just days apart, on two different continents, sparked concern over whether there could be a broader contagion that mirrored the global financial crisis of 2008.

Here’s what you need to know.