Credit Suisse chair says SVB crisis looks contained, rejects talk of government assistance

The contagion effect from the recent collapse of Silicon Valley Bank is local and contained, Credit Suisse Chairman Axel Lehmann said Wednesday, who also declined to comment on whether his firm would need any sort of government assistance.

On Friday, SVB was taken over by regulators after massive withdrawals a day earlier effectively created a bank run. HSBC agreed on Monday to buy the British arm of the troubled U.S. tech startup-focused lender for £1 ($1.21).

Concerns of contagion and increased regulation and just some general profit-taking caused European banks to post their worst day in more than a year on Monday. The heavy selling continued on Wednesday with Credit Suisse itself falling over 24%.

That leg lower was sparked by Credit Suisse’s largest investor, Saudi National Bank, which said it could not provide the Swiss bank with any further financial assistance, according to a Reuters report.

“We cannot because we would go above 10%. It’s a regulatory issue,” Saudi National Bank Chairman Ammar Al Khudairy told Reuters Wednesday. However, he added that the SNB is happy with Credit Suisse’s transformation plan and suggested the bank was unlikely to need extra money.

When asked by CNBC’s Hadley Gamble at a panel session in Riyadh Wednesday if he would rule out some kind of government assistance in the future, Lehmann answered: “That’s not the topic.”

“We are regulated, we have strong capital ratios, very strong balance sheet. We are all hands on deck. So that’s not the topic whatsoever.”

Embattled lenders Silicon Valley Bank and Silvergate were not subjected to strict enforcements that govern bigger banks in the U.S. and other parts of the world, Lehmann also said on the panel session.

“I look to what has happened in Silicon Valley Bank, and subsequently other midsize banks — they are not really subject to stringent regulation, as you have in other parts of the world,” he said, citing the Basel III requirement that underpins most banks’ operating framework.

“So in this regard, I think [the contagion] is somewhat local and contained,” he said.

However, Silicon Valley Bank’s fallout still serves as a “warning signal” for the overall market climate, the chairman cautioned.

The Swiss lender on Tuesday revealed that it had identified “certain material weaknesses” in its internal control over financial reporting for the years 2021 and 2022.

It also recently confirmed its 2022 results announced on Feb. 9, which recorded a full-year net loss of 7.3 billion Swiss francs ($8 billion).