ING, ABN Amro down sharply on Amsterdam stock market over Credit Suisse concerns
The share price of both ING and ABN Amro, like other European banks, fell sharply on the stock exchange on Wednesday. Investors were particularly concerned about Credit Suisse, which appears to be in serious financial trouble. As a result, there are fears that other banks could also face difficulties.
The two largest Dutch banks each lost nearly 10 percent in market value. Due to concerns about the banking sector, almost all listed companies in Amsterdam went down. The AEX index closed 2.9 percent lower at 716.47 points.
Elsewhere in Europe, Deutsche Bank and BNP Paribas fell sharply in market trading. The unrest also follows the bankruptcy of two banks in the United States last weekend, Silicon Valley Bank and Signature Bank.
In Zurich, Credit Suisse plummeted 24 percent. The scandal-plagued Swiss bank has long been under pressure as customers continue to withdraw money from their accounts over concerns about the bank's future. Shares of Switzerland's second-largest lender took a heavy hit on Wednesday after the bank's largest shareholder, Saudi National Bank, indicated it did not want to invest any additional capital in Credit Suisse.
Credit Suisse has asked the Swiss central bank to publicly support the financial group, British business newspaper, Financial Times (FT), reported based on information from unnamed sources. Credit Suisse has also asked Swiss financial regulator Finma to provide a public vote of confidence. Neither organization issued a public statement about the unrest surrounding the bank.
The Swiss central bank and Credit Suisse declined to comment when FT asked questions from FT. Finma was not immediately available for comment, according to the newspaper.
The European Central Bank (ECB) also asked eurozone banks about their financial exposure to Credit Suisse, the Wall Street Journal reported on information from sources. Those questions about the money they have outstanding with the Swiss bank followed their sharp loss in stock market value on Wednesday.
A spokesperson for the ECB declined to comment on questions from the American business newspaper. Credit Suisse is supervised by Swiss authorities, but also by supervisors from other European countries because the financial group is active there.
Credit Suisse is undergoing a major reorganization and suffered a net loss of 7.3 billion euros last year, partly due to a few costly scandals. For example, Credit Suisse did business with investment fund Archegos and the financing company Greensill, which collapsed due to risky behaviour.
Credit Suisse has been designated a systemic bank, which means that the failure of the institution could cause major problems for the entire financial sector. That is why the bank must maintain higher than normal capital buffers, and have a plan for the orderly resolution of financial emergencies.
Since the banking crisis of 2008, the interconnectedness of banks in Europe has been reduced considerably. Where it used to be common for banks to have very high amounts of money outstanding with each other, this is now more commonly organized through central banks.
ING, the largest bank in the Netherlands, would not respond to questions about its ties with Credit Suisse. The same applies to pension investor APG, which invests the hundreds of billions in pension money of the Netherlands' largest pension fund ABP.
Earlier this week, a spokesperson said that APG had an equity interest of more than 1 percent in the fallen American bank SVB. The value of 130 million euros is now considered a total loss by the pension investor. "But that was a bankruptcy of a specific bank, we are not going to respond to everything. The prices of shares of stocks and bonds go up and down every day."
The ties between SVB and PFZW, the second Dutch pension fund, seem much more limited, although the organization only provides figures as of June 30, 2022. At that time, the health care fund had just under 12 million euros in shares in the American bank. Exposure to Credit Suisse at that time was 7.3 million euros in equities and 40 million euros in bonds.
Reporting by ANP