Major central banks have sought to boost the flow of liquidity in the global banking system with a series of coordinated currency swaps to ensure banks have access to the dollars they need to conduct their operations.
European stock markets witnessed a slight rise in the beginning of trading on Monday, the day after the acquisition of Credit Suisse by the Swiss bank UBS, in a rescue operation that did not contribute to removing investors’ doubts about the solidity of the banking system.
After its collapse in the morning, European indices rose slightly, with the Paris Stock Exchange index rising 0.14%, and the Frankfurt and London indices by 0.04% at 10:00 GMT.
In the early morning hours, the most prominent European financial markets recorded a decline at the start of the trading sessions on Monday, and the most prominent index on the London Stock Exchange fell by 1.1% to reach 7,258.31 points.
In the eurozone, the Frankfurt Stock Exchange index fell 1.0% to 14,617.00 points, and the Paris Stock Exchange index decreased by 0.8% to 6,868.51.
In the morning, Standard Chartered and HSBC shares fell more than 6% each in Hong Kong today, Monday, to their lowest level in more than two months, while HSBC faces the possibility of recording the largest decline. in one day in six months. The “MSCI” index of financial sector stocks in Asia, excluding Japan, declined by 1.3%.
In a package overseen by Swiss regulators, UBS announced on Sunday that it would pay 3 billion Swiss francs ($3.23 billion) to buy Credit Suisse, which was founded 167 years ago, and would incur losses of up to $5.4 billion.
Faced with a rapidly spreading crisis of confidence in the financial system, major central banks on Sunday also sought to boost liquidity flows in the global banking system with a series of coordinated currency swaps to ensure banks have access to the dollars they need to conduct their operations.
Although these moves seemed to boost investor confidence in early Asian trading, the rally abated quickly as focus shifted to the huge losses that some Credit Suisse bondholders would incur under the takeover.
According to the deal, the regulator of the financial sector in Switzerland decided to estimate the value of additional first-class bonds issued by Credit Suisse with a nominal value of $ 17 billion at zero, which angered some bondholders who thought that they would get more protection than what shareholders get in the acquisition deal. Announced yesterday Sunday.
Concerns about what the move might mean for additional tier one bonds issued by other banks added to lingering concerns about a range of risks, including spillover of the crisis through the banking sector, the fragility of local U.S. banks and moral hazard.
