While sources said there was little risk of spillover to bigger or European banks, due to the nature of SVB's business as a specialist lender, confidence has been hit in eurozone banks.
Credit Suisse on Thursday morning said it had taken "decisive action to pre-emptively strengthen liquidity" and intended on taking 50 billion Swiss francs ($54 billion) in support from the Swiss National Bank, via a covered loan facility and short-term liquidity facility. The SNB and Swiss financial regulator FINMA late Wednesday extended the offer of support to Credit Suisse after the bank's share price dropped more than 30% and the value of its debt securities had also "been particularly affected by market reactions in recent days."
The Swiss central bank and regulator also said "there are no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the U.S. banking market."
In the wake of the banking-related situation, it is now central banks' role to "focus on keeping investors' heads cool and to avoid dangerous situations that might not have been really warranted given objective facts but that has largely been triggered by a loss in confidence in the system," Tatjana Puhan, deputy CIO and managing director at TOBAM, said in an emailed response to questions. It's what the SNB has done for Credit Suisse, and what the Federal Reserve and European Central Bank also do for the banks in their own currency regions, she said.
Sentiment has weakened for global banks since the collapse of SVB, Signature Bank and Silvergate, "and obviously the crisis of confidence surrounding (Credit Suisse) did weigh on the European banking system to some extent," Eoin Walsh, portfolio manager at TwentyFour Asset Management, said in an emailed response to questions. The impact was felt in the broader equity market over debt markets, he said, "where moves were more orderly, but bonds did trade off in sympathy."
Mr. Walsh said the bond boutique, an affiliate of Vontobel Asset Management, doesn't expect Credit Suisse's move to secure support will weaken sentiment; rather, "if anything it should improve it."
"You could argue that, given the enhanced focus on the European banking system since the SVB collapse, it just emphasizes the strong regulatory regime we have here and the very strong capital levels European banks have, which should ultimately help support sentiment," Mr. Walsh said.