Swiss regulator monitoring banks and insurers after SVB collapse

ZURICH (Reuters) – Swiss financial regulator FINMA on Monday said it was seeking to identify any potential contagion risks for the country’s banks and insurers following the collapses of Silicon Valley Bank and Signature Bank.

Shares in Swiss banks slumped along with others in the sector globally after moves by U.S. authorities to guarantee deposits of the two lenders failed to reassure investors.

Credit Suisse shares hit a new low, while the cost of insuring its debt against a default rose to an all-time high. Shares of Swiss rival UBS dropped more than 7%.

“FINMA takes note of the media reports on Silicon Valley Bank and Signature Bank in the USA and is closely monitoring the situation,” FINMA said in a statement.

“FINMA is evaluating the direct and indirect exposure of the banks and insurance companies it supervises to the institutions concerned,” it said. “The aim is to identify any cluster risks and potential for contagion at an early stage.”

The regulator said it was in contact with various institutions which could be affected, but declined to name them or the measures it might take.

President Joe Biden pledged on Monday to do whatever was needed to address the banking crisis precipitated by the collapse of the two lenders which forced regulators to step in with emergency measures to stem contagion.

FINMA said it was also monitoring for any spill-over effects from the failure of another tech-focused U.S. bank, Silvergate Capital Corp, which said on Wednesday it was planning to wind down its operations and liquidated voluntarily.

The regulator said its supervisory activities were focused on the risk management of supervised institutions and on dealing with various scenarios.

Switzerland’s Federal Department of Finance said it “takes note of the reports on US banks and the development of the stock markets” but would not be further commenting on them.

The government department also pointed to FINMA’s role and said “FINMA is closely monitoring Credit Suisse as part of its supervisory activities.”

The Swiss National Bank declined to comment on the effect SVB’s collapse could have on Switzerland’s financial sector.

In a further reflection of investor concern about Credit Suisse’s outlook, the price of some of its bonds fell sharply, with some at record lows. 

Struggling to recover from a string of scandals, Switzerland’s second-biggest bank has begun a major overhaul of its business, cutting costs and jobs and creating a separate business for its investment bank under the CS First Boston brand.

Last week it announced it was delaying the publication of its annual report following a call from the U.S. Securities and Exchange Commission.

Credit Suisse goes off piste, https://www.reuters.com/graphics/CREDITSUISSEGP-STOCKS/dwpkdzxxovm/chart.png

Fallout spreads

Germany’s Bundesbank convened its crisis team on Monday to assess the possible fallout of the collapse of SVB on the local market, even as no emergency action was foreseen in Europe.

Europe’s STOXX banking index fell 5.8% and was on track for its biggest two-day fall since March 2022, soon after Russia invaded Ukraine. Shares in Germany’s Commerzbank fell as much as 12.7%.

Earlier on Monday, the Bank of England facilitated a private sale of the UK arm of SVB to HSBC in a move which would protect deposits without taxpayer support

(Reporting by Paul Arnold, Chiara Elisei and Noele Illien, writing by John Revill; Editing by Rachel More, Elisa Martinuzzi and Emelia Sithole-Matarise)